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Heads of 8 State-run Financial Firms Reshuffled

Posted May. 08, 2008 08:27,   


Eight of 12 major state-owned financial firms will see a change in leadership.

The Financial Supervisory Commission yesterday released the results of a study to determine whether to reappoint the presidents of the 12 companies.

“The results depended on their understanding of government policies, management performance and expertise,” the commission said.

The Strategy and Finance Ministry also announced that its affiliates including The Export-Import Bank of Korea, Korea Minting & Security Printing Corp. and Korea Investment Corp. will replace their CEOs.

Financial authorities have accepted letters of resignation from the heads of all state-owned financial firms since the general election ended April 9.

Critics complain, however, over what they call unclear standards over who should stay and who should go.

○ CEOs serving under a year reappointed

Experts say the government’s decision is apparently influenced by how long the presidents have served.

Industrial Bank of Korea President Yoon Yong-ro, Korea Asset Management Corp. President Lee Cheol-hwi, and Korea Deposit Insurance Corp. President Park Dae-dong were reappointed. They have been in office for less than one year.

Seoul Guarantee Insurance President Bang Yeong-min was also reappointed after being appointed less than a year ago.

On the other hand, Woori Financial Group Chairman Bahk Byong-won and Woori Bank President Park Hae-choon were not retained. They assumed office slightly more than a year ago.

It remains to be seen whether the government will set the same criteria for CEOs of other state-owned firms.

○ Criticism over unclear standards

Other factors have apparently affected the personnel reshuffle. Korea Development Bank CEO Kim Chang-rok is expected to be let go since he has received criticism for his bureaucratic style from President Lee Myung-bak.

Korea Securities Depository Chairman Jo Seong-ik is also accused of illegally hiring staff by the Board of Audit and Inspection.

Woori Chairman Bahk is also expected to be out of a job given his previous stint at the Economic Planning Board. The board mainly dealt with macroeconomic policies and backed the group’s idea of the “mega bank,” which goes against the government’s plan to privatize the Korea Development Bank.

Though Woori Bank President Park has shown good performance, he is also likely to go because of his close ties to former Finance Minister Lee Hun-jae, who worked for the Roh Moo-hyun administration.

A financial expert said, “It doesn’t seem right to change CEOs who came from the private sector along with the change in administration. The results of public company reform will determine if the government’s decision to fire CEOs is justified or not.”

○ Worry over replacement process

More than one and half months are needed to choose the heads of the Korea Credit Guarantee Fund, KIBO Technology Fund, and Korea Securities Depository. These organizations have to follow rules governing state-owned firms when they recruit new heads.

A selection committee must choose candidates through open recruitment and recommend them to the Financial Supervisory Commission. The commission then screens the candidates and recommends the finalists to the president, who appoints the heads.

More than two months are needed to appoint heads of financial firms belonging to the Woori Financial Group, where the Korea Deposit Insurance Corp. holds a major stake.

Newly chosen heads must also win approval at shareholders’ meetings. Given that, state-owned financial firms will inevitably face difficulty in operations in the first half.

A source from the Strategy and Finance Ministry said, “We’ll shorten the period of open recruitment and evaluation to less than one month.”

larosa@donga.com higgledy@donga.com