KB Financial`s two outside directors to resign amid reform

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SEOUL, Jan. 27 (Yonhap) -- Two outside directors with KB Financial Group Inc.
offered to resign Wednesday amid moves by the South Korean government to reform
non-executive boards of the nation's banking groups.
Byun Bo-kyung and Kim Han, two of KB Financial's nine outside directors,
expressed their intention to step down as non-executive board members, said the
nation's biggest financial service company which also controls top lender Kookmin
Bank.
KB Financial will also set up a committee for nominating new non-executive
directors in order to improve fairness and transparency in the selection process,
the financial group said in a statement.
The decisions came as the government has tried to increase the independence of
outside directors and curb cronyism between directors and company executives at
banking groups.
Non-executive directors have been criticized for turning a blind eye to risky
decisions by local banks that resulted in massive losses, particularly in light
of the recent global financial crisis.
Kookmin Bank CEO Kang Chung-won gave up his candidacy for the KB Financial
chairmanship on Dec. 31 amid rising tension with financial authorities over his
appointment by the group's non-executive directors.
On Jan. 14, the Financial Supervisory Service and the Bank of Korea launched a
joint investigation into the group's trading activities and alleged ties between
Kang and the directors.
Amid rising skepticism over bank governance, the trade association for the
banking sector unveiled on Monday sweeping changes on its guidelines governing
banks' non-executive directors.
The new guidelines restrict outside directors to two-year terms for a maximum
service of five years, reversing the previous rules that allowed three-year terms
for an unlimited period.
The directors are also banned from taking stock options and other performance
compensation from the firms that they serve, according to the new rules.
"While the guidelines are results of agreements between banks, financial
authorities will take the guidance into account when they regulate the banking
sector," said an official at the Korea Federation of Banks.
pbr@yna.co.kr
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