Search for FSS governor begins

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Search for FSS governor begins

Kim Ki-sik fell from grace on Monday, stepping down from his post as governor of the Financial Supervisory Service (FSS). His resignation came just 14 days after he assumed the post, making his tenure as head of the nation’s financial watchdog the shortest in history.

Now that the position is vacant for the second time in a month, questions remain who will next oversee Korea’s financial industry.

Kim, a former lawmaker and civic activist, took the helm of the FSS on April 2, replacing Choe Heung-sik, who called it quits after being mired in a hiring favoritism scandal. But criticisms about Kim’s actions as a lawmaker snowballed. Eventually, it was decided by the National Election Commission, which has the right to determine the legality of actions by lawmakers, that he violated laws about the use of political donations, and he was forced to quit.

Initially, Kim’s appointment came as a shock to the local financial industry.

Not only did he come from a non-bureaucratic background, but he was known for his critical attitude toward family-owned conglomerates known as chaebol. Kim’s background in the financial sector was also limited compared to his predecessors. As a lawmaker from May 2012 to May 2016 as a member of the Minjoo Party, he served as a member of the National Policy Committee of the National Assembly, which put him in a position to oversee financial authorities and banks in Korea.

As a lawmaker, he proposed a number of regulations for the industry, many of them quite bold at the time, such as lowering the maximum interest rate in the country dramatically.

But some welcomed the appointment of a hard-line reformist like Kim, especially as the industry was under fire for a number of reasons.

“The industry was in a mess due to a number of controversies such as the governance structure of big companies and irregular hiring practices,” said Park Jin-hyoeng, a banking analyst from Yuanta Securities. “[Industry players] expected some changes [to come] with the appointment of Kim as the governor of the FSS.

“But now that he’s fallen from grace, the industry is once again in panic mode,” Park added. “It is now anxiously watching to see if he will be succeeded by a hard-line reformist [like Kim] or someone with softer tendencies.”

There are a number of individuals who are considered potential successors to Kim.

One is Yoo Kwang-yeol, first senior deputy governor of the FSS, who will temporarily watch over the FSS until a new chief is selected.

Others, however, say that President Moon Jae-in will likely to bring in another non-bureaucrat.

Moon said in a statement on April 13 that for an industry that needs fundamental reform, he must give it a shock by appointing someone from outside. Choe also came from a non-bureaucratic background.

A number of names are being mentioned by the local media, many known for hostility toward the chaebol.

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