KB Financial chairman selection underway before governance overhaul, with Yang Jong-hee favored for reappointment

KB Financial Group will narrow its pool of candidates for the next group chairman to three on Thursday. The financial industry widely expects incumbent Chairman Yang Jong-hee to win reappointment, buoyed by record-breaking earnings. A planned overhaul of governance rules for financial holding companies — once expected to apply first to KB Financial's chairman selection — appears unlikely to affect this round, as the reform announcement has been delayed past the relevant window.

According to financial industry sources on Wednesday, KB Financial's chairman candidate recommendation committee will conduct first-round interviews and evaluations of six candidates on Thursday before shortlisting three. On Sept. 11, the committee will hold in-depth interviews with the three finalists and select one through a vote.

The internal candidates include Yang, KB Financial's head of global, wealth management and SME operations Lee Jae-geun, head of future strategy Lee Chang-kwon, and KB Kookmin Bank President Lee Hwan-joo. The external candidates are Kwon Gwang-seok, former president of Woori Bank, and one individual who requested anonymity.

KB Financial extended the candidate vetting period to more than three months for this selection. The process also gives external candidates roughly two months to prepare before the first interview and includes pre-arranged meetings with committee members, narrowing the information gap with internal candidates. The final candidate will undergo qualification checks and receive recommendations from the committee and the board before being formally appointed at an extraordinary shareholders' meeting in November. KB Financial launched the management succession process in June, when it established detailed guidelines expanding the evaluation and vetting period and giving external candidates more preparation time.

Industry observers say Yang currently leads the field. His incumbency advantage aside, his management performance during his first term is seen as his strongest asset for reappointment.

KB Financial posted a net profit for the period of 3.88 trillion won ($2.81 billion) in the first half of this year, the highest half-year earnings in the group's history. The record follows last year's annual net profit of 5.84 trillion won, itself a historic high, meaning the group has broken its own record two years running. Return on equity for the first half of this year stood at 14.09 percent, and non-banking subsidiaries' contribution to group profit expanded to around 44 percent. Total shareholder returns for the year are expected to reach around 3.7 trillion won.

The financial authorities' governance reform discussions, once flagged as a key variable in this selection, have also lost much of their force. Regulators had been considering limiting financial holding company chairmen to a single reappointment — effectively barring a third term — but are now understood to have shifted toward requiring a shareholder supermajority vote for any reappointment. The change follows sustained opposition from political circles and others who argued that directly capping the tenure of private-sector CEOs by law could be unconstitutional. The authorities appear to have pivoted from directly limiting the number of terms to tightening the shareholder approval threshold instead.

Since this would be Yang's first reappointment bid, the originally considered three-term ban would not have directly constrained him in any case. However, the broader push to tighten the CEO selection process at financial holding companies had been cited as a source of uncertainty for this round, so the dilution of the reform is seen as reducing that uncertainty.

The industry broadly expects the governance reform delay, combined with Yang's strong earnings record, to limit any impact on the current selection.

"The industry has long assumed that Yang's selection would most likely be completed under the current system," a financial industry official said. "With governance reform discussions repeatedly pushed back, the mood is increasingly favorable for Yang, who has demonstrated his management capabilities through results."

However, some observers warn that governance debates could intensify after this selection concludes. "Government pressure for governance reform is likely to grow stronger after Yang," the official said. "If a direct cap on the number of terms is off the table, the discussion will ultimately have to shift toward strengthening the independence of outside directors so they can properly check management."