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Regulator moves to overhaul governance at financial firms

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(Globalpost/GlobalPost)

SEOUL, June 17 (Yonhap) -- The financial regulator unveiled Monday a set of measures aimed to bolster transparency at local financial holding companies as part of a broader effort to revamp their governance structure.

In the preliminary guideline, the Financial Services Commission (FSC) said financial holding companies will be required to disclose details on individual outside director's wages in a regulatory filing.

As for an appointment of the financial group's chief executive officer (CEO), each firm can set up a nomination committee under the direct control of the board, instead of running the committee on a temporary basis, the FSC said.

The FSC plans to finalize the guidelines after it gathers more viewpoints from various experts at a public hearing held later in the day.

The regulator's push for governance overhaul at financial holding companies came as there has been growing criticism on large banking firms becoming too political.

The management views the board as an obstacle or a cursory procedure that conflicts with it and often results in political wrangling, the FSC said. Some chief executives exert excessive power over management, and outside directors are unable to raise their voices because they want to keep their seats, it noted.

In order to prevent such irregular practices, FSC Chairman Shin Je-yoon has vowed to make changes for an overhaul in governance.

Though it's not completely bound by law, the revised guidelines will help major financial holding companies here realign the governance structure and responsibilities of the management and the board, the FSC said.

Under the guidelines, a financial holding company should release details on the appointment process for CEOs and have the board's authority specified in a written text to avoid conflicts of interest. The FSC is also pushing to require the financial companies to write up a governance report every year.

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