The Export-Import Bank of Korea headquarters in Seoul / Yonhap
Private sector still facing obstacles to codetermination system
By Park Jae-hyuk
Attention has been focused on whether KB Kookmin Bank and the Industrial Bank of Korea (IBK) will follow the example set by the Export-Import Bank of Korea (Eximbank), which became the country’s first financial company and state-run institution to give a board seat to an expert recommended by its union.
According to the Ministry of Economy and Finance, Deputy Prime Minister and Finance Minister Hong Nam-ki appointed Maritime Finance Institute CEO Lee Jae-min and lawyer Yun Tae-ho of the law firm Bae, Kim & Lee, as Eximbank’s new nonexecutive directors last Friday.
The person backed by the union is Lee, who previously worked for the state-run bank.
After his retirement in 2011, he served as a professor at Korea Maritime & Ocean University. The Eximbank union recommended him for his expertise in maritime financing and reputation for strong communication with employees.
After former Hyundai Marine & Fire Insurance auditor Na Meong-heon exited the board in May, the union requested appointing an additional outside director to improve governance structure, which was accepted by the government and the bank’s management.
In 2020, the Eximbank union failed in its attempt to introduce a codetermination system, referring to a system in which seats on a board of directors are given to employees or their representatives.
President Moon Jae-in originally promised to allow public institution workers to directly join their companies’ boards, but doing so will require a revision of the law. So unionized workers at state-run financial firms have urged the government to give board seats to union-backed outside experts.
Although the government has remained lukewarm over this matter over the past four years, the Eximbank union accomplished its goal, just a few months before the end of Moon’s five-year term.
Industrial Bank of Korea headquarters in Seoul / Yonhap
The Eximbank union’s achievement has encouraged the IBK union, which has made similar attempts in 2019 and earlier this year. The state-run bank’s unionized workers expect an expert recommended by them to be appointed as a nonexecutive director next March.
“IBK CEO Yoon Jong-won and former Financial Service Commission (FSC) Chairman Eun Sung-soo agreed to the appointment of a union-backed outside director,” an IBK union representative said. According to the IBK Act, the FSC chairman has the right to appoint its nonexecutive directors, following requests from the bank’s CEO.
The labor-friendly attitude in state-run banks is unnerving the management of private-sector banks, because it may lead the government to pressure them to give management rights to their workers.
“Commercial banks will face pressure to follow the example of state-run banks,” a commercial bank official said on condition of anonymity.
However, it is still unclear whether private financial firms will offer their board seats to union-backed experts, given that their shareholders have the right to make the final decision on the appointment of outside directors.
In particular, the employee stock ownership association of KB Kookmin Bank did not recommend a candidate for an outside director during the general shareholders meeting earlier this year, despite the union’s continuous efforts to introduce a codetermination system.
The decision came last December after vice branch manager Moon Hoon-joo defeated union leader Ryu Je-gang in the election for the association’s leader. Before the election, the union leader led the association, so the association represented the union during shareholders meetings.
Moon said he would prioritize improving shareholder value, rather than making efforts to obtain a board seat from management. In contrast, the KB union plans to raise awareness about the necessity of a union-backed director, before the expiration of a foreign nonexecutive director’s term next year.Internet Explorer Channel Network