(2nd LD) KB Financial's new head resigns

(ATTN: RECASTS headline; UPDATES with more details throughout)
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 Thursday in an emergency meeting to
cancel the scheduled shareholders' meeting as Kang, 58, expressed his intent to
resign, the group said.
"I decided to resign from the chairmanship, as keeping the post would not serve
the interest of KB Financial, shareholders and customers," Kang said in a
statement. But he will maintain his job as president of Kookmin Bank.
The resignation comes amid rising controversy that the government is trying to
exert influence on an internal decision of a private company that seems to be at
odds with the financial regulator.
The Financial Supervisory Service (FSS) conducted a probe 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 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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