The Financial Supervisory Service (FSS) has expressed its concern about KEB Hana Bank president Ham Young-joo being selected for the third consecutive term.
The financial regulator met with three outside directors of Hana Financial Group on Feb. 26 with regard to the group’s selection of candidates for the bank’s top post.
The FSS said it conveyed its concern about the possibility that legal risks of Hana Bank management could undermine the bank`s managerial stability and credibility, and urged the outside directors to fulfill their responsibility to check the bank’s management on behalf of its shareholders and customers.
The FSS noted that while the bank’s regulation requires employees to be excluded from their duties when they are indicted by the prosecution, this is not applied to the executives in charge of the bank's management. Ham is allowed to seek a third terms instead of being excluded from his duties.
FSS Governor Yoon Seok-hun told reporters right after his breakfast meeting with heads of domestic banks, "The supervisory authorities have something to do regarding the appointment of a bank president. It is to ensure that the legal risks of top management is checked well."
Analysts say that the FSS effectively expressed its opposition to Ham's third term. They say that the supervisory authorities use the term “concern” to express their position since they cannot directly intervene in personnel management of private financial institutions.
Ham was indicted without detention in June last year on charges of obstruction of business and violation of the Act on Equal Employment and Support for Work-Family Reconciliation, and has been on trial since August last year. Questioning of witnesses are currently under way, with the verdict of the first trial expected to be handed down around the end of this year.
Ham was accused of obstructing the selection of successful applicants in the hiring process in 2015 by ordering the bank’s Human Resources Department to take good care of the son of one of his acquaintances.
Ham is also alleged to have instructed the Human Resources, in the run-up to the recruitment processes in 2015 and 2016, to select many male applicants by making the ratio of successful male and female applicants 4 to 1.
Hana Financial Group believes that Ham contributed to the stability of KEB Hana Bank and improved its profitability as the bank’s first president after the merger between Hana Bank and Korea Exchange Bank (KEB) in 2015. Regarding the trial on hiring corruption, the group’s position is that the principle of presumption of innocence should be respected until the final verdict is handed down.
KEB Hana Bank's labor union has a different view. "There is no objective evidence to support Ham's excellence in management skills, and on the contrary, he caused a delay in the integration of Hana Bank and KEB," the union said on Feb. 25.
Hana Financial Group's nomination committee will hold a meeting on Feb. 28 to reduce the number of candidates for the next president to two.
"We do not want to intervene in personnel management of private banks. Our responsibility is to address the risks that a financial institutions faces due to its faulty corporate governance,” an FSS official said.