In yet another spillover effect of the Choi Soon-sil scandal, the financial sector is paying close attention to who will replace some of the outgoing heads of major financial institutions, many of which have often been criticized for being a hotbed for revolving-door practices.

Starting with Woori Bank and Industrial Bank of Korea in December, a handful of public and private financial institutions have outgoing chief executive officers. But they have not yet embarked on the appointment process as they are paying keen attention to the political scandal that is spiraling into all industrial sectors.

Some are reportedly anticipating less political pressure in selecting the new chiefs, while others are simply facing delays as their heads need to be approved by the president.

Since the beginning of the Park Geun-hye administration, appointments of chief executive officers of both public and private financial institutions were often accompanied with suspicions of so-called “invisible hands” from the political circles. 

In late 2014, Lee Kwang-goo, the current CEO of Woori Bank, Lee Duk-hoon, the current CEO of Export-Import Bank of Korea, Hong Sung-guk, a former CEO of KBD Daewoo Securities and Chung Yun-dae, the current CEO of Koscom, were appointed to their positions.

Except for Hong who resigned from the post in early November after merging Daewoo Securities with Mirae Asset Securities, the rest are incumbent.

They were key members of “Seogeumhoe,” an unofficial clan of financial figures who graduated from Sogang University, President Park’s alma mater. Rumors were circulating at the time that the clan had been consolidating its power cross the industry with the inauguration of the Park government.  

“I am even hearing that one of the (commercial) bank CEOs rose to the post because his wife had connections with Choi,” an industrial source told The Korea Herald, referring to the president’s close friend Choi Soon-sil who is at the center of the scandal.

Most recently in September, the Korea Exchange labor union had protested the designation of its new chief Jeong Chan-woo, a former vice chairman of the Financial Services Commission, for being a case of a “parachute appointment.” Jeong was known to be an ally of President Park since he served during her presidential transition. He had sought a proportional representation nomination from the ruling Saenuri Party in this year’s general election, but had been unsuccessful.

Hong Ky-ttack, a former chairman of Korea Development Bank, was also a close aide to President Park, as he served in her transition committee. Hong was appointed as KDB chairman in 2013 despite strong protest from the bank trade union against the alleged parachute appointment.

But with the widening impact of the presidential scandal, financial institutions could now face less political pressure in the upcoming chief appointments, industry watchers said.

“The CEO appointment at Woori Bank, for example, has long been under government influence, since the bank was under management of Korea Deposit Insurance Corp,” an industry source said.

Woori Bank is planning to hand over the appointment of its new CEO to a new board, recommended by its shareholders including seven new investors that were given 4 to 6 percent stakes in the bank just last Sunday. “The next CEO can be nominated by the new shareholders,” a bank spokesman said. “But there are also some market forecasts that current CEO Lee may be reappointed considering the current conditions involving management.”

Meanwhile, for the IBK, it is inevitable for them to wait and watch the ongoing developments of the scandal, since the appointment for the IBK CEO should be first proposed by the Financial Services Commission and requires approval from the president.

“We are guessing that we might see an internal promotion, like the case of the current CEO, but who knows,” said the bank’s spokesperson. Three vice presidents who are approaching ends of their terms are being considered as possible candidates within the bank, according to the spokesman.

The situation is the same at other state-run financial institutions.

Korea Asset Management Corp. and Korea Securities Depositary have outgoing CEOs this month. In accordance with nomination procedures, Yim Jong-yong, the current chairman of the FSC has proposed Moon Chang-yong, a former deputy minister for budget at the Ministry of Strategy and Finance as the Kamco CEO. The proposal, however, remained shelved as the president faces prosecutorial questioning.

Yim himself is the nominee for finance minister, but has not been able to prepare for a confirmation hearing by the National Assembly, since his nomination process has been halted upon Park’s withdrawal of her nomination of Kim Byong-joon as prime minister.

The KSD has formed a committee to recommend candidates, but has not yet begun the appointment process. Korea Technology Finance Corp. has an outgoing president in January, which requires approval from the FSC chairman and the president, however, there is no known development on its candidate selection.

By Song Su-hyun (song@heraldcorp.com)