KB Kookmin Bank in Korea

Moon-Kyung Cho, Ho-Young Lee and Dan-Bee Song
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Moon-Kyung Cho: Texas A&M International University, USA
Ho-Young Lee: Yonsei University, Korea
Dan-Bee Song: The Ohio State University, USA

Asian Case Research Journal (ACRJ), 2016, vol. 20, issue 02, 283-304

Abstract: KB Kookmin Bank (KB) was the most prominent commercial bank in Korea. However, KB faced two challenges: declining firm performance and a lack of transparency in corporate governance at the level of its financial group, KB Financial Group (KBFG). By the end of 2012, KB was not a market leader in Korea any more. In addition, a conflict arose between the CEO and some members of the board of directors (BOD) of KBFG when an insider leaked private information to the International Shareholders Services (ISS). The insider reported that certain BOD members decreased firm value by disrupting the senior management’s strategic plan to increase the firm’s long-term competitiveness, which required attention from institutional investors.KBFG had three issues based on the inside information provided and an independent analysis. First, its CEO had been selected from outside KBFG, and he was under pressure to improve firm performance before his term was over. Second, some KBFG BOD members did not represent the interests of the company’s general shareholders, including foreign institutional investors and the National Pension Services of Korea. Finally, the heavy influence of the Korean government was culturally ingrained within the corporate governance structure of KBFG.

Date: 2016
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DOI: 10.1142/S0218927516500103

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