NPS tipped to restart CIO selection process in hunt for new candidates

The National Pension Service (NPS) has failed to choose a chief investment officer from 16 applicants and is likely to restart the selection process from scratch, according to government and financial industry sources on June 24.

NPS kicked off the CIO recruitment process in February, seven months after ex-CIO Myoun-Wook Kang stepped down before his two-year term ended.

Among the 16 applicants, the CIO search committee interviewed eight shortlisted candidates in early April, and selected three of them for recommendation to NPS chairman and chief executive Sung-joo Kim.

The three candidates were Thae Khwarg, a former head of Barings’ South Korean asset management arm; Dong-min Lee, a former Bank of Korea’s chief investment officer for foreign reserves; and Young-mok Yoon, ex-head of the NPS’ strategy unit.

NPS CEO Kim was supposed to pick one of them and seek approval from Minister of Health and Welfare Neung-hoo Park.

But no progress has been made since then, with the process completely halted.

Market talk is that the strongest candidate Khwarg failed to meet eligibility requirements which were tightened after Ki-sik Kim, ex-head of the regulatory Financial Supervisory Service (FSS) involuntarily resigned in April.

The ex-FSS head Kim stepped down after he was found to be sponsored for overseas business trips by financial institutions under his supervision.

No details were available about which requirements Khwarg didn't meet.

To fill the vacant CIO position, the South Korean government is widely expected to restart the CIO selection process from the beginning.

But it is unclear whether the hiring process will be completed by year’s end.

Questions remain about whether the NPS can find a qualified CIO candidate, considering its location in Jeonju, which takes five to six hours in a round trip from Seoul and the sudden resignation and imprisonment of ex-CIOs of the $580 billion pension scheme.

“Investment experts active in markets are hesitant to apply for the job on concerns that (CIO) may play second fiddle unless he has a strong supporter in the current government,” said a CIO of a life insurance company in Seoul.

“The fact itself that political factors need to be considered in the CIO selection, which must be free of politics, shows how backward the NPS’ governance is,” he added.

In-Sik Cho, NPS’ global public market head, has been serving as acting CIO since July of last year. Global private equity head Hyung-Don Choe has been heading the global alternative investment division.

yoocool@hankyung.com