ISS supports Shinhan Financial Group chairman nominee

Proxy adviser Institutional Shareholder Services Inc. (ISS) is supporting the appointment of Shinhan Financial Group chairman nominee Jin Ok-Dong as an inside director.

ISS recommended stockholders of the leading South Korean financial group to vote for Jin’s appointment at an annual shareholder meeting on March 23, local financial industry sources said on Thursday.

“Jin played a key role in improving the risk management of Shinhan Financial,” the proxy adviser was quoted as saying by the sources.

ISS said Jin has established measures to prevent the recurrence of a major fraud scandal of a domestic hedge fund involving the group. The measures include improving inside control systems and reorganizing key performance indicators for employees who sell high-risk products.

Last year, South Korea’s financial regulator took punitive action against Shinhan Bank for its involvement in a financial fraud scandal involving a now-defunct hedge fund.

Lime Asset Management, once the country’s largest hedge fund, was accused of selling and running fraudulent financial products and subsequently freezing fund redemption estimated at around 1.6 trillion won ($1.2 billion) in 2019.

Jin, who has been CEO of the bank since 2019, was nominated as group chairman as he cemented the lender’s position as the leading South Korean bank and laid the foundation for sustainable profits through his capable management with a series of record earnings and risk control during COVID-19.

VETOES KB UNION’S OUTSIDE DIRECTOR CANDIDATE

Separately, ISS has opposed the nomination of an outside director endorsed by the unionized workers of KB Financial Group.

The group union recommended Lim Gyeong-jong, a former head of PT Koexim Mandiri Finance, a subsidiary in Indonesia of the Export-Import Bank of Korea, as a candidate for the position in a bid to improve risk management of PT Bank KB Bukopin Tbk, which the South Korean group acquired in 2020.

KB Kookmin Bank, the group’s flagship banking unit, has injected some 2 trillion won in total into the Indonesian lender but its losses have mounted to about 700 billion won.

ISS said the union’s argument is not convincing, adding “the appointment of outside directors recommended by the union should be determined by what contribution the candidate can make to shareholders.”

The union has recommended outside director candidates five times since 2017 but none of them succeeded in gaining shareholder approval.

Write to Bo-Hyung Kim at kph21@hankyung.com
 
Jongwoo Cheon edited this article.