The most difficult and crucial aspect of the transaction has become the selection of the new CEO. Tensions have arisen as H&CB's Kim Jung Tae has vied with Kookmin's Kim Sung Hoon to get the top spot. A five person merger committee will decide the new CEO but thus far it has deferred the controversial decision.
This prevarication is regarded unfavourably by many international observers. The CEOs each have strong views, and until it is known who will lead the bank, it is difficult to gauge what the new organization's approach will be to such sensitive issues as chaebol lending.
Accordingly FinanceAsia decided to create a sophisticated poll to cast some transparency on this key issue.
We verbally contacted 25 bank analysts, and polled them on a series of questions, including who should be made CEO. Of the 25 contacted, five could not respond because of conflicts, and five worked for Korean securities firms. The rest worked for international securities houses.
In addition, we contacted 16 major international fund managers who own stock in either of the banks, and in many cases both of them. They were asked the same questions.
Both fund managers and analysts were asked whom they thought the new CEO had to have most credibility with international investors, Korean investors, or the Korean financial community. Interestingly 58% thought the most important 'credibility constituency' was international investors.
This suggests that if the merger committee chooses a CEO not to the liking of international investors, it could create a loss of confidence among that group. This, in turn, could be bad for Korea Inc.
The results of our poll are reasonably clear. It was overwhelmingly felt that it was important for the new CEO to be able to resist government and union pressures and have a track record in banking.
The bank analysts almost universally prefer H&CB's current CEO, Kim Jung Tae for the role, while 53.33% of the international investors felt the same - as against 13.33% who prefer Kookmin's Kim Sung Hoon.
Interestingly, 26% of the international investors said a non-Korean with a banking background would be the best choice - someone like a Wilfred Horie who runs Korea First Bank.
This poll reflects the international view on the CEO issue. However, it backs up the findings of a survey in Korea by the money team of Chosun Ilbo which interviewed eight leaders of commercial banks, including the presidents of Cho Hung Bank, Seoul Bank, Hana Bank, Koram Bank, and Hanvit Bank, and two vice chairman of Shinhan banking group and Woori Financial group. H&CB's Kim Jung Tae was the victor in this poll too.
