The evolving face of South Korea's bank governance

The Star

23-07-2025

SEOUL: South Korea's financial giants have been working to shed their long-standing reputation for rubber-stamp governance, as diversity and boardroom expertise have visibly improved.
Yet, with chief executive officers (CEOs) and legacy ties still exerting implicit power in some high-level conference rooms, the extent to which boards can hold management accountable remains in question.
All four of South Korea's top financial groups now have at least two female outside directors, with women holding an average of 32% of those seats.
Shinhan leads with four of nine, followed by KB with three of seven, Hana with three of nine and Woori with two of seven.
Notably, the female directors are, on average, more than a decade younger than their male peers – suggesting that gender inclusion is also fostering generational renewal.
Average board ages cluster between 61 and 63, with Shinhan and Woori the youngest at roughly 61.7 years old.
However, none of the boards currently includes a foreign national.
The last was Stuart B Solomon, a former MetLife executive who left KB in 2022.
The absence is especially striking given that foreign investors now hold an average 63% stake across the four groups – more than six times the Kospi average.
While not legally mandated, foreign directors are widely seen as a marker of governance transparency and stronger representation of foreign shareholders' interests.
Strengthening internal oversight was the dominant theme in board appointments across Korea's top banking groups this year.
Woori made the most sweeping changes, replacing four of its seven outside directors after a high-profile internal control failure led to regulatory scrutiny.
It also launched an ethics and internal control committee and revamped its audit committee.
New appointees include Kim Choon-soo, a compliance specialist and former head of Eugene Group's ethical management division, and Rhee Yeong-seop, a Seoul National University professor with expertise in economics and financial regulation – both expected to strengthen the group's internal controls.
To support Woori's digital transformation, technology entrepreneur Kim Young-hoon, a founding member of Daou Tech, also joined the board.
Still, gaps remain.
Woori's board skill matrix highlights a lack of expertise in consumer protection and legal affairs – areas that need strengthening going forward.
The other three groups, with more balanced skill coverage, emphasised continuity while selectively shoring up governance capabilities.
Shinhan added two new directors with deep ties to Japan, preserving its long-standing alignment with the Korean-Japanese community and maintaining the share of third-generation Korean-Japanese outside directors.
New appointees include Chun Myo-sang, a third-generation Korean Japanese and certified public accountant in Japan, and Yang In-jip, a Korean national with extensive professional experience in Japan, including as a tech CEO and former chair of the Korean Business Association in Japan.
This enduring alignment reflects Shinhan's founding roots – established with capital from Korean Japanese investors in the 1980s – and continues to serve as a stabilising force in its governance.KB maintained board stability while adding targeted expertise.
New appointees include Ewha University economics professor Chah Eun-young and E-Jung Accounting CEO Kim Sun-yeop, bolstering regulatory and audit oversight.
A new internal controls committee is chaired by Lee Myong-hwal, a veteran economist and policy expert.
Notably, KB limits outside director terms to five years, shorter than the industry's six-year norm, underscoring its commitment to board renewal.
Hana made minimal changes but focused on governance upgrades.
It established an internal controls committee and added Suh Young-sook, former chief credit officer at SC Bank Korea, as its only new outside director.
Though modest in scope, the move raised Hana's female director ratio and added global credit expertise.
Despite formal efforts to separate management and oversight, executive influence remains entrenched.
At KB and Shinhan, the CEOs of their flagship banks – Lee Hwan-ju and Jung Sang-hyuk, respectively – sit on the holding company's board as 'non-standing' directors: non-executive, non-independent, but voting members who serve on committees. — The Korea Herald/ANN