The unprecedented leadership strife that has put KB Financial Group under government sanctions has sounded an alarm in the industry about the critical flaws in the current financial holding company system.
In order to extricate financial companies, shareholders are urged to more actively exercise their rights, according to Kim Sang-jo, chief of Solidarity for Economic Reform and professor of trade at Hansung University.
“The financial holding company in Korea is largely out of order,” he said at a lecture hosted by Financial Supervisory Service Gov. Choi Soo-hyun on Tuesday.
“In order to reform the current situation, shareholders should have their say in selecting the CEO and the board of directors.”
He suggested to the minority shareholders of KB Financial Group to form solidarity and exercise their proposal rights. The shareholders could also file shareholder derivative lawsuits against the management if necessary.
Such an alliance could be formed by the end of this month.
The comments from the outspoken expert on shareholder rights and corporate governance came as the financial sector is reeling from feuding and mismanagement at the nation’s top financial group, KB Financial.
KB Financial, which incorporates flagship KB Kookmin Bank, has recently seen the resignation of bank president Lee Kun-ho and the ouster of the group chairman Lim Young-rok.
Both officials received reprimands from financial authorities earlier this month, mostly over an internal strife concerning the replacement of the bank’s computing system. The strife was the result of festering bad relations between Lim and Lee, which has caused confusion at the management level of both the group and the bank. Ultimately, it has brought about the current management vacuum, experts said.
“The key rationale behind a financial holding company system is to promote efficiency through dual leadership,” Kim said. “This means the group chairman and the bank president should work toward synergy. If this is not possible, then the job should be given to a single person, instead of two.”
He added that it did not make sense to appoint both a chairman and a president at KB Financial, considering that the bank owns over 90 percent of the group’s assets.
By Bae Hyun-jung (tellme@heraldcorp.com)
