Governance structure in the crosshairs

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Governance structure in the crosshairs

Yoon Jong-kyoo, who assumed posts of chairman and CEO of KB Financial Group and president and CEO of KB Kookmin Bank, said he will review the corporate governance structure of the financial institution from scratch.

At his first press conference on Tuesday at the bank’s headquarters in Yeouido after taking office last week, the group chairman and bank president avoided the issue of outside directors who account for more than half of the institution’s board, but clearly said the plan is for an overall makeover.

“There are areas to be improved, as many critics pointed out, including the process of recommending, nominating and evaluating performances of outside directors,” said Yoon. “Working-level officials are currently selecting a consulting firm to request a restructuring plan.

“In the past, KB was an exemplary model of corporate governance. This time, our thought is to start again.”

KB Kookmin Bank is the country’s largest financial institution in terms of the number of branches.

Despite its wide presence, the bank’s public image has been tattered due to internal strife in its boardroom, scams by employees and revolving-door appointments.

Before Yoon took office, there was a feud between the former group chairman and former bank president over replacing the bank’s computer system, which led to the resignations of both. Outside directors of the group and the bank’s boards are said to have aggravated the conflict. The outside directors have said they will stay in their positions until their terms expire in March.

Yoon’s restructuring plan will be implemented next year.

“I will maintain the double post of group chairman and bank president until our institution restores its competitiveness and public trust,” Yoon said. “If it turns out to be efficient, we may consider keeping it.”

Along with governance reform, there will be some work force restructuring and combining of branches.

“Development of mobile devices will have a stronger impact on the banking industry than the Internet, and some branches with low profitability will be consolidated with those nearby,” said Yoon. “In business districts, branches will adjust their main operations to focus on corporate banking, while those in residential areas will focus on retail banking. In affluent areas, the wealth management business will be enhanced.”

The main idea of the comprehensive management plan Yoon is working on is that KB will retain what it is good at: retail baking, lending for small businesses and the corporate investment business.

“We will further reinforce our biggest strength - retail banking - and regain customers’ trust,” said Yoon. “Except for the Industrial Bank of Korea, we are the biggest contributor to increasing support for small businesses, and we should do more.”

As the low interest rates persist and consumers’ appetite for higher risk improves, KB will step up its wealth management business, too, Yoon said. “Outside the country, KB is interested in being part of development of the Mekong River Belt, encompassing Vietnam, Laos, Cambodia and even Myanmar,” Yoon said.

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