President Lee Kun-ho of Kookmin Bank.(Photos:Kookmin Bank) 

President Lee Kun-ho of Kookmin Bank is now free to come to work for the first time in two weeks since his appointment as the CEO of the nation’s largest bank after the labor union of the bank suspended its opposition to the appointment of the new CEO.

The new CEO, who was promoted from a vice president of the bank, held a press conference at the Yeouido head office in Seoul on Aug. 5, his first day in office.

Lee said the salaries of the bank’s executives should be connected to performance results and a study is being done to see if the current annual payments for executives of the bank is proper based on the past several years’ performance, and if necessary, they will be readjusted, clearly indicating that he is ready to take action if needed to reduce the annual payments.

The new president also made clear that he won’t make reforms to the bank’s organization just to improve profits, as it would not help just to reduce the bank’s number of employees. He said the bank went through a restructuring two or three years ago, but its profits had not improved.

Lee said the bank will expand its business with SMEs, although their financials are rather weak. He will see that the bank’s risk control mechanism will be improved in the near future so that it can deal with SMEs expansively.

As to the lack of onsite experience, the new CEO said he will visit the branches around the country as often as he can to learn what’s happening at the branches and he will also take up the matters at meetings with the vice presidents in charge of the banking network operations as often as he can.

Lee also said he would not overdo a turnaround the bank’s operations to recover its profit levels, adding that the bank’s H1 profit was not satisfactory, with one of the reasons being a slow down in real estate loans.

The personnel shake-up would not be too expansive because he prefers personnel moves just to back up his management policies and they will be based on performance results of those involved, with no room for favoritism or cronyism.

“The bank has 200 trillion won in deposits and 20 trillion won in capital and we have to protect our customers first and foremost,” Lee said.

Lee met with President Park Byung-kwon of the labor union on Aug. 4 to settle the union’s opposition to Lee’s appointment and they reached an agreement with the new CEO agreeing to manage the bank free of any outside influences and realize responsible management to improve working conditions for employees. He said he would guarantee stability for employees and ruled out a restructuring of the bank that would lead to a reduction of the number of employees for the sake of just cutting the number of employees.

The new president was appointed on July 22, but he had to forego his inauguration ceremony due to the labor union’s objection. He started to work as the president from July 23, but had been unable to go to his office because of a strike by the labor union. The labor union head went on a hunger strike and had to be taken to a hospital. Lee visited him at the hospital and the two reached an agreement to end the labor union’s opposition on a number of conditions.

In the meantime, Kookmin Bank went through a reorganization of its operational structure on July 23 to cope with uncertainty in management and the financial market environment in order to maintain its growth.

The restructuring reduced the number from 10 groups, 15 headquarters, and 57 departments and one office to 17 headquarters, 57 departments and two offices with the number of managers of headquarters slimmed from 25 to 17. This was aimed at boosting the internal operation’s performance and management results through speedy decision-making to cope with changes in the financial market, the bank said.