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| KB Kookmin Bank's head branch on Yeouido, Seoul / Courtesy of KB Kookmin Bank |
By Kim Bo-eun
Private companies have been on alert since the National Assembly passed a bill to introduce a system at state-run firms, via which unions will be able to be represented by a member at the board level.
The pro-labor policy has not yet been extended to the private sector, but businesses are keenly observing movements that could possibly lead to that possibility.
One such move is taking place at KB Financial Group. The financial firm's union has been suggesting for several years that the company's board make room for a union-backed member.
In its fifth year, KB's union proposed former Export-Import Bank of Korea (Eximbank) Vice President Kim Young-soo to be a member of the company's board.
The union has failed so far in getting its demand accepted, but financial firms are watching closely as this year's recommendation comes after the introduction of the union-backed board member system earlier this month.
The union held a conference in front of KB Kookmin Bank's head office on Yeouido, Seoul, Tuesday, stating that the financial group needs Kim to offer expertise on overseas businesses. The union said that KB currently does not have an expert in overseas business among the outside directors on its board.
The financial firm's union is taking issue with the poor performance of the foreign banks that KB has acquired in recent years. KB Kookmin Bank acquired Indonesia's Bank Bukopin for 1 trillion won ($839 million) in 2020. But the bank's deficit stood at 118 billion won in the third quarter of last year.
The union's earlier attempts to include a union-backed member on KB's board were frustrated by opposition from the global proxy advisory firm Institutional Shareholder Service, as well as from Korea's National Pension Service (NPS). The NPS is KB Financial's largest shareholder, holding 9.77 percent of its shares.
The pro-union policy at state-run firms will go into effect in July. They will be required to have one non-permanent director on their board who is recommended by the union.
The policy is expected to expand to state-run banks. Eximbank in September became the first lender to appoint a union-backed board member.
A KB official explained that the union's stance is based on an existing regulation, under which investors holding 0.1 percent of the financial firm's shares are able to propose figures for the board.
"This is different from a union-backed board member system," he said.
But in the case that the union's proposal is accepted, with shareholders supporting the appointment of the figure they back, it will essentially be seen as the same as introducing a union-backed board member system.
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