Chairman Yim Jong-yong of the Financial Services Commission.

Chairman Yim Jong-yong of the Financial Service Commission (FSC) said the financial community should break down its old practices of excessive self-protection and personnel policies based on the length of employment. 

He made the remark in his New Year’s statement released on Jan. 3.

The FSC chairman said the first task to raising the financial industry to an advanced level in the world would be to change the culture of the industry, especially with regard to making personnel policies based on performance results instead of the traditional method that ensures automatic promotions with no reference to performance results.

The top official of the financial authorities in Korea got the attention of the financial industry after he said he will push for financial reform that might not be welcomed by some players in the industry. Some industry stalwarts had expected him to simply promote the easing of financial regulations.  

Reform plans also include the FSC will bringing down the walls that divide financial sectors.

Atop the agenda for this year is the privatization of Woori Bank.

The FSC chairman thinks that the reform of the personnel systems at financial institutions is one of the key issues that the FSC will push for this year. That includes salary increases for those who are up for promotion.

Most financial institutions agree with the reform package, which may face union opposition. They agree that the crux of the personnel policy reform should be on the deputy branch managers who are content with their salaries and want to continue to remain at their current positions, although they didn’t get promoted to branch manager. The key officials of many banks say it is a tough task to make their banks profitable and competitive without taking care of some highly overpaid deputy branch managers by changing the personnel policy systems.

An official of a nationwide commercial bank said those deputy branch managers don’t care about their promotions and are ready to stay with the bank until their retirement, getting annual pay raises based on their years of employment.

The FSC will also break down the walls dividing financial sectors by allowing banks to make direct investments in key areas among different financial businesses. 

Another key issue is allowing the securities firms to make payments directly to corporations. The third item being considered for reform is allowing the sales of each other’s financial commodities among banks, insurance and securities firms, excluding the financial commodities exclusive to them.

The FSC also wants to get rid of government shares in Woori Bank to expedite its privatization. Chairman Yim is determined to sell the government’s stake in the bank as soon as possible, which he revealed at a meeting of top officials of the FSC. FSC officials held a meeting with the officials of a state wealth fund in a Middle East country on one occasion, but the outcome is not yet certain.

The financial authorities succeeded in selling KDB Daewoo Securities in an open bidding toward the end of last year, despite concern that the company’s share price may fall.

This year, the non-banking affiliates of the Korea Development Bank may be put on the block. Financial sources said other government-invested companies may be up for grabs, too, this year.

A view of the sign board of FSC in Seoul.(Photos:FSC).