Banks kick off CEO selection with tighter vetting, expanded nomination panels

With the terms of several major bank chiefs set to expire at year's end, financial holding companies have formally launched the process of selecting their next chief executives. As financial regulators press for greater fairness and transparency in subsidiary CEO succession, the groups are moving to tighten candidate vetting and expand the role of bank-level executive nomination committees.

KB Financial Group, Hana Financial Group, Woori Financial Group and BNK Financial Group all initiated CEO succession procedures for their key subsidiaries, including their next bank presidents, on Wednesday.

Hana, Woori and BNK in particular unveiled plans that day to strengthen candidate vetting and broaden the involvement of bank-level executive nomination committees, in response to regulators' calls for governance reform.

Woori Financial Group said it would add a management performance review step to its bank nomination committee process and bring in outside specialist firms to participate in candidate vetting. The group also said it would establish clear criteria and procedures for each major stage of the succession process in advance.

A Woori Financial Group nomination committee official said the group plans to "faithfully operate the succession process based on significantly improved procedures and appoint the most qualified candidate based on management capability."

Hana Financial Group also broadened the authority of its bank nomination committee. In addition to its existing role of recommending candidates for the bank presidency, Hana Bank's nomination committee will this year be able to weigh in on the final shortlist compiled by the holding company. The committee chair will attend the final candidate evaluation in person to convey the panel's views.

Hana also detailed its vetting timeline. The group will allow a minimum of two weeks for vetting at each stage of the shortlisting process, narrow the field to no more than three final candidates per major subsidiary by late October, and recommend a single finalist to each subsidiary's nomination committee by early December.

BNK Financial Group said it would this year provide both internal and external candidates with identical information — covering each subsidiary's management performance, key issues and strategy over the past three years — to reduce information gaps among candidates. BNK plans to draw up an initial candidate pool in mid-to-late October, narrow it further by mid-November and select a final candidate by mid-December.

KB Financial Group also activated its subsidiary CEO nomination committee on Wednesday, beginning the selection process for the president of KB Kookmin Bank and other subsidiary chiefs. In the previous KB Kookmin Bank selection, the group drew up a management succession plan in June 2024, set candidate criteria, processes and a schedule in September, and then shortlisted and chose a final candidate in November.

The moves by the financial holding companies follow a recent push by regulators to strengthen the fairness and transparency of subsidiary CEO succession. Financial Supervisory Service Director General Lee Chan-jin met with the chairs of eight banking groups on Sept. 23 and urged them to base personnel decisions and candidate vetting on competence rather than personal ties, and to strengthen the role of subsidiary nomination committees.

In line with that regulatory stance, Shinhan Financial Group had already launched its subsidiary CEO succession process on Sept. 21, expanding the scope of Shinhan Bank's nomination committee. The group said it would share its pool of succession candidates — managed at the holding company level — with the bank's nomination committee and allow that panel to recommend individuals for inclusion. It also made the qualification requirements and evaluation criteria for subsidiary chief executives more specific.

Within the industry, however, the concern is less about the individual reform plans each group has put forward and more about the lack of clarity over the direction and scope of the governance improvements regulators are seeking. While financial firms have been reinforcing the role of bank nomination committees and tightening vetting procedures, no concrete standards have been set for how far authority should be redistributed between holding company nomination committees and those at the subsidiary level.

One industry official said they agreed with the regulator's stated goals of greater transparency and fairness, but added that "for this to develop into an effective system, the authorities also need to spell out their intent and direction more clearly."