Delayed Governance Reforms for Financial Holdings Spark Doubts on Effectiveness

The government's delay in announcing its reform policy for financial holding company governance structures is raising doubts about the actual effectiveness of the proposed changes. The reforms are expected to include stricter procedures for chairman reappointments, enhanced independence for outside directors, and term limits for chairmen.

However, with the reappointment processes for the chairmen of major financial holding companies largely concluded, analyses suggest that a late announcement will have a limited impact on the market. Among the proposed reforms, a 'three-term limit' is seen as a symbolic measure to prevent prolonged tenures. Yet, considering that it is rare for a chairman of a domestic financial holding company to serve three terms, with most stepping down after two, there are points suggesting this regulation may not bring about substantial change.

Criticism also suggests that measures like the introduction of a special resolution or strengthening outside director independence, which are being considered alongside term limits, have limitations in fundamentally changing the decision-making structure. The recent approval rates for chairman reappointments at financial holding companies — 99.3% for Woori Financial, 88.0% for Shinhan Financial, and 91.9% for BNK Financial — indicate that meeting special resolution requirements would not be difficult. Moreover, in boards where outside directors constitute a majority, reappointment decisions are made based on business performance.

While the reforms were anticipated before the regular shareholders' meetings, the delay in their announcement means that the reappointment agendas for the chairmen of major financial holding companies have already been finalized. Woori Financial, Shinhan Financial, and BNK Financial have confirmed reappointments through their shareholders' meetings, while KB Financial has initiated its next chairman selection process. In this context, the announced reforms are pointed out as being closer to post-hoc institutional adjustments rather than pre-emptive checks. Governance reform is highly dependent on timing, and with key decisions already made, the practical effect of the policy is inevitably delayed.