Financial holding companies add more external directors

[Graphics by Song Ji-yoon]

Major South Korean financial holding companies are increasing their overall number of external directors and expanding the proportion of female external directors ahead of their annual shareholder meetings in March 2024.

The move comes after Korean financial authorities called for Korean financial holding companies to strengthen their checks and balances on management while reducing gender imbalance, given that the average number of external directors at Korean financial holding companies is only seven to nine, or about half the size of global financial firms, and are criticized for their lack of impartiality.

According to sources from the country’s five major financial holding companies (KB, Shinhan, Hana, Woori, NH Nonghyup) on Sunday, the terms for 27 out of a total of 37 external directors in these holding companies will expire within March 2024.

Each holding company plans to increase the proportion of female external directors during the process of appointing successors for directors whose terms have ended or who have voluntarily resigned, according to the sources.

Woori Financial is seeing the term expiration of external director Song Soo-young, who has served for two years. To succeed Song, Woori recommended Professor Lee Eun-ju of Seoul National University and Professor Park Sun-young of Dongguk University, as external director candidates. If the appointments are approved at its annual shareholder meeting, Woori Financial will have seven external directors, up from six, and two female external directors, up from 1. The female ratio will also increase from 16.7 percent to 28.6 percent.

Hana Financial recommended former Korea Customs Service Commissioner Joo Yung-sup, former Deloitte Anjin LLC Chairman Lee Jae-sul, former Samsung SDS Co. Vice President Yoon Sim, and Professor Lee Jae-min of Seoul National University as candidates to replace external directors Kim Hong-jin, Yang Dong-hoon, and Heo Yoon, who are retiring in March 2024. Of the candidates, Yoon is female and Hana Financial will increase the number of external directors from eight to nine, and the number of women from one to two. The percentage of women will also increase to 22.2 percent from 12.5 percent.

For its part, Shinhan Financial is expected to announce its recommendation for external directors when it discloses the agenda for its shareholder meeting within the week. While maintaining the current total of nine external directors, the company plans is to increase the number of female directors from the current two to further address gender diversity concerns.