KB Financial Group, CEO Reshuffle Signals… Surprise Appointment of ‘Financial Expert’ Lee Hwan-joo as President of Kookmin Bank

[Korea Financial Times, Han aran] Lee Hwan-joo, CEO of KB Life Insurance, has been selected as the new head of KB Kookmin Bank. This is the first time that a CEO of an affiliate has been selected as the head of a bank under the KB Financial Group. It is interpreted that Chairman Yang Jong-hee of KB Financial Group has stepped forward to strengthen the synergy of affiliates in earnest, putting Lee, who has experience in holding companies, banks, and non-banks, at the forefront in order to expand the foundation for balanced growth. As the appointment of the head of Kookmin Bank, a key affiliate, is focused on ‘reform,’ the personnel changes at other affiliates are also expected to expand.

On the 27th, KB Financial Group held a committee to recommend candidates for the CEO of affiliates and recommended Lee as the next candidate for the head of Kookmin Bank.

It is being viewed as a ‘surprise appointment’ that Lee Hwan-joo has been selected as the next bank president instead of the current bank president Lee Jae-geun, who was expected to have his term extended by one year as he had successfully served two consecutive terms.
This appointment is also the first case of a CEO of an affiliate moving to the position of bank president at KB Financial Group. Both current CEO Lee Jae-geun and former Vice Chairman Huh In were vice presidents at the time they were appointed as the president of Kookmin Bank.

Lee candidate is a true ‘KB man’ who has held various high-ranking positions in banks and holding companies. He is considered a sales expert with extensive experience in frontline sales sites and a representative financial expert within the group who served as the Chief Financial Officer (CFO).

Born in 1964, Lee candidate graduated from Seonrin Commercial High School and Sungkyunkwan University’s Department of Business Administration and earned an MBA from Helsinki School of Economics and Management.

After joining Kookmin Bank in 1991, he served as the Gangnam Kyobo Intersection Branch Manager, Star Tower Branch Manager, Sales Planning Manager, Foreign Exchange Business Division General Manager, Individual Customer Group Executive Director, and Sales Planning Manager.

He served as Vice President of the Management Planning Group, which was in charge of the bank's CFO in 2020, and as the holding company's CFO since 2021. After being appointed as the CEO of KB Life Insurance in 2022, he has been leading KB Life, a merged corporation of KB Life Insurance and Prudential Life Insurance, since January of last year.

Lee candidate is known to be well-versed in numbers and has received Chairman Yang's thick trust for his meticulous style. This appointment is interpreted as Chairman Yang's will to actively pursue the improvement of Kookmin Bank's constitution based on the candidate's financial expertise and management ability.

Considering that the management environment surrounding the bank is expected to be unfavorable next year as well, and that Kookmin Bank suffered a large non-operating loss this year due to losses from Hong Kong H-index equity-linked securities (ELS), it is analyzed that he is seeking a change with new leadership.

A KB Financial official said, “In order to respond to the difficult management environment, such as the decrease in net interest margin (NIM) due to the decline in market interest rates and the increase in volatility in the global financial market, management expertise that can promote the growth of Kookmin Bank’s core businesses is necessary.”

The KB Financial Group CEO Recommendation Committee evaluated the candidate as the right person who can consistently promote the sound growth of Kookmin Bank and continuously lead the improvement of corporate and shareholder value through structural improvements centered on capital and cost efficiency.

The CEO Recommendation Committee stated that the candidate is “a person with strong leadership that can simultaneously lead the stability and change of the organization, such as strengthening the global business drive, fundamental internal control innovation, corporate culture renewal, and establishment of a clear communication process,” and “He also possesses customer-centered thinking and bold execution capabilities.”

Lee candidate is also expected to maximize synergy between banks and non-banks in terms of strengthening the group's balanced portfolio.

Lee candidate is evaluated as a person with considerable understanding of affiliated businesses in the group. While serving as the first CEO of KB Life, he led the physical and chemical integration of the integrated corporation steadily while also promoting the development of new markets such as entering the nursing business.

Last year, KB Life's net profit for the period was 256.2 billion won, an 88.7% increase from the previous year's combined net profit of KB Life and Prudential Life (135.8 billion won). In the third quarter of this year, the cumulative net profit was 276.8 billion won.

An official from the KB Financial Group CEO Recommendation Committee explained, “This candidate recommendation is a reflection of KB Financial Group’s personnel philosophy that while aiming for the stability and substance of the organization, an executive with proven outstanding performance across all areas of KB Financial Group, including the holding bank and non-banking, should be in charge of the largest affiliate, the bank, and promote maximizing synergy between the bank and non-banking.”

Lee candidate will undergo an in-depth interview and review/recommendation by the Kookmin Bank CEO Candidate Recommendation Committee and will be finally appointed at the general shareholders' meeting. The term of office will be two years starting in January next year.

The tasks of this candidate include regaining the 'leading bank' and normalizing the Indonesian local corporation KB Bukopin Bank (now KB Bank). Kookmin Bank's accumulated net profit for the third quarter of this year decreased by 8.3% year-on-year to KRW 2.6179 trillion due to the impact of the large-scale provisioning related to the ELS loss in the first quarter.

Starting with the selection of the bank president candidate, it is expected that Chairman Yang’s color will be fully displayed in the appointment of the CEOs of the remaining affiliates. The KB Financial Group’s CEO Recommendation Committee plans to recommend the next representative candidates for the affiliates around the middle of next month. In addition to the next KB Life CEO position, the company will also determine the successors of KB Securities CEO Kim Sung-hyun and Hong-koo, KB Card CEO Lee Chang-kwon, and KB Data Systems CEO Kim Myung-won, whose terms end at the end of next month.

It seems that there will be a generational change in the follow-up personnel of Kookmin Bank. The terms of all 24 vice presidents and 11 out of 15 executive directors of Kookmin Bank will expire at the end of this year. A KB Financial official said, “It is expected that the management supporting the bank president will be boldly selected with excellent young talents who can lead innovation.”

Han aran(aran@fntimes.com)