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KB Kookmin Bank in Korea

Author

Listed:
  • Moon-Kyung Cho

    (Texas A&M International University, USA)

  • Ho-Young Lee

    (Yonsei University, Korea)

  • Dan-Bee Song

    (The Ohio State University, USA)

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.

Suggested Citation

  • Moon-Kyung Cho & Ho-Young Lee & Dan-Bee Song, 2016. "KB Kookmin Bank in Korea," Asian Case Research Journal (ACRJ), World Scientific Publishing Co. Pte. Ltd., vol. 20(02), pages 283-304, December.
    • Handle: RePEc:wsi:acrjxx:v:20:y:2016:i:02:n:s0218927516500103
    DOI: 10.1142/S0218927516500103
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    Cited by:

    1. Byung Wook Jun & Sung Man Yoon, 2020. "Foreign Banks Acquisition Strategy and the Business Approach of Domestic Bank: A Case of Standard Chartered Bank," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(7), pages 861-874, July.

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