Relocating KB headquarters may aid internal tiesKB Financial Group has decided to relocate its headquarters later this month from Myeongdong, central Seoul, to the nation’s financial hub in Yeouido, southwestern Seoul, where the headquarters of its flagship KB Kookmin Bank is situated.
The office in Myeongdong first opened when the banking group was converted into a holding company in 2008. “The goal of relocating the headquarters is to enhance [the financial group’s overall] efficiency by merging the overlapping functions [with the bank’s], including risk management, computer system management and even public relations, especially since the chairman of the financial group is also acting as the president of KB Kookmin Bank.”
Earlier, the chairman and president were separate functions, though after Yoon Jong-kyoo was inaugurated as the financial group’s chairman in late November, he took on both roles.
The physical separation of the chairman and bank president’s offices was long considered a symbol of the rocky relationships among the financial group’s top management.
Other financial holdings companies, including Shinhan and Hana, have the offices of the chairman and the president under a single roof.
The power struggle between the financial group’s chairman and the bank president peaked last year, ending badly for KB. After a six-month feud between the two, both Chairman Lim Yong-rok and bank President Lee Kun-ho resigned.
“If the offices of the chairman and the bank president were physically close, they could have had more direct communication, which could have prevented the conflict from ending the way it did,” said a high-ranking KB official.
Relations between the holding company and the flagship bank went back and forth depending on who had more influence within the group.
Even though the headquarters for the financial group’s holding company was located in Myeongdong, the influence of the bank’s president from Yeouido never easily subsided, especially because the bank’s assets account for 90 percent of the financial group’s overall assets. Even the earnings are heavily dependent on banking - one of the reasons why the financial group’s chairmen have tried over the years to diversify the financial group’s portfolio.
When Euh Yoon-dae, a former scholar and close adviser to former President Lee Myung-bak, took the lead as chairman of the financial group in 2010, he tried to exert stronger influence on the bank by opening up the chairman’s office just above the president’s in Yeouido.
Euh hoped to root out any conflicts that may surface with the bank’s president by wielding more power. However, his successor, Lim, didn’t have the power he had, nor the political connections. Instead, he chose to isolate the bank’s presidents by ostracizing them from the financial group’s board of directors.
Yoon’s decision to take up both the role of chairman of the holding company and bank president appears to be a bold attempt to eradicate any possible friction. The physical separation of the holding company and the bank also symbolized the continuous tension between Kookmin Bank and the Housing and Commercial Bank (H&CB).
The two banks merged in 2001 to become today’s KB Kookmin Bank. However, there is still tension among those who originated from Kookmin Bank and H&BC. The merger of the separate headquarters - long one of the financial group’s goals - is expected to improve internal relationships.
Several locations are currently being considered for the move, including the MBC broadcast station’s property in Yeouido as well as the IFC mall. The Finance Center in Gwanghwamun, central Seoul, was also another site the financial group was considering, though the former chairmen of the financial group didn’t have solid enough influence within the organization to push through with it.
BY CHO MIN-GEUN [firstname.lastname@example.org]
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