KB Financial's new head signals intent to resign

(ATT: RECASTS headline, lead; UPDATES with more info from para 2)
SEOUL, Dec. 31 (Yonhap) -- The newly nominated chief of KB Financial Group Inc.

expressed on Thursday his intent to step down amid the financial regulator's
intense scrutiny into alleged wrongdoings by the group's outside directors.
Kang Chung-won, president of the group's banking unit, Kookmin Bank, was
nominated Dec. 3 to lead South Korea's top financial services company. Final
approval for the chairman was supposed to be made at a shareholders' meeting Jan.
7.
But the board of directors decided later in the day at an emergency meeting to
cancel the scheduled shareholders' meeting, and Kang expressed his intent to
resign, they said.
The resignation comes amid scrutiny by the Financial Supervisory Service (FSS)
into alleged wrongdoings by the group's outside directors, who have wielded
decisive influence on the process of picking the group's chairman. The board
consists of nine outside directors and two inside members.
The financial regulator, which has prepared to overhaul the outside director
system of the nation's banks, asked KB Financial to postpone the selection of its
new chairman, but the group pushed through with the nomination.
Adding to the controversy, the FSS launched a preliminary probe into alleged
influence-peddling by the group's outside directors and suspects one member of
exerting influence on the group's decision to sign a tech supplier contract.
Kang, 58, was nominated to lead the group two months after Hwang Young-key
stepped down when the financial watchdog punished him for inflicting investment
losses worth of 1.62 trillion won (US$1.39 billion) on Woori Bank. Hwang headed
the state-owned bank and its parent in 2005 and 2007.
The process of selecting a new head had been marred by a controversy over fairness.
Two other candidates -- Lee Chol-hwi, chief executive of the state-run debt
clearer Korea Asset Management Corp., and Kim Byung-ki, former head of the
Samsung Economic Research Institute -- withdrew their bids, saying that outside
directors had already decided to pick Kang.
sooyeon@yna.co.kr
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