When I meet securities firm chief executives in private, I often get the worried question: "What will happen to Yoon Byung-woon, president of NH Investment & Securities (005940.KS)?" With his term having ended about two months ago, the brokerage's CEO structure has shifted from a 12-year single-CEO system to a co-CEO arrangement.
NH Investment & Securities is majority-owned by NH Nonghyup Financial Group and is not entirely free from the influence of the National Agricultural Cooperative Federation (Nonghyup). This round of deliberations by the executive nominating committee is drawing attention because of the controversy that surrounded the CEO selection two years ago. At the time, former president Chung Young-chae, who led NH Investment & Securities' golden era for six years through three consecutive terms, announced his departure, only for speculation to emerge about a parachute appointment of a candidate with no securities industry experience. The conflict between Nonghyup and NH Nonghyup Financial Group spilled into the open, and financial authorities intervened over concerns about independence. In the end, Yoon, a "securities man" with heavyweight credentials in investment banking (IB) and coverage, was tapped for the job. But Lee Suk-joon, former chairman of NH Nonghyup Financial Group, had to forgo a one-year extension of his term as a consequence of selecting a capital markets specialist. He chose honor and the organization's development over his own tenure.
Yoon worked alongside former president Chung for more than 20 years and succeeded him in the post. Some dismiss him as a "Chung Young-chae kid" for this reason, but over the past two years he has put his own stamp on the company and delivered clear results. In the first quarter of this year, the firm posted operating profit of 636.7 billion won and net profit of 475.7 billion won, a record high for a single quarter, and it won approval for its integrated management account (IMA) business. Within the organization, synergies among IB, retail and asset management divisions have deepened, and the firm has moved quickly to supply "productive finance," a priority stressed by President Lee Jae-myung. When the former IB head became embroiled in a scandal, Yoon preemptively removed him from duty despite being a valued junior colleague and used the episode as a chance to fix the internal control system.
Yoon is seen as easygoing in manner but relentlessly determined when it comes to work. Externally, he is a well-connected figure in the financial investment industry. He serves on the board of the Korea Financial Investment Association (KOFIA) and acts as secretary of the gathering of major securities firm CEOs. His role in the KOFIA chairman election also shone quietly. With a "say what needs to be said" personality, he has not hesitated to speak out on industry issues and has often led public opinion. Knowing that style, many around him appear to be worried on his behalf.
Among all affiliates carrying the NH name, NH Investment & Securities has the least of the Nonghyup color. Nonghyup headquarters may find this unsatisfactory, but on Yeouido — Korea's financial hub — people say that as a listed firm and a brokerage, it naturally requires the autonomy distinctive to the securities business. After then-NH Nonghyup Financial chairman Yim Jong-yong, now chairman of Woori Financial Group, acquired Woori Investment & Securities in 2014, he guaranteed independent management for employees, and the number of executives transferred from Nonghyup to the securities arm was in fact limited. As a result, the DNA of the former LG Investment & Securities has been preserved to this day.
Now at NH Investment & Securities, the IB head will oversee strategy and personnel, while the wealth management (WM) head will be responsible for consumer protection and research. Some securities firms, including Mirae Asset Securities, KB Securities, Meritz Securities, Shinyoung Securities and Kyobo Securities, operate under a co-CEO system, and it clearly has the effect of complementing the single-CEO system. What matters is that sustainable growth hinges on who is chosen as the next CEO.
It is often said that the securities business is a people business. Talent movement between firms is active, and it is common for top performers to earn far more than the CEO. Appointing the wrong person could cause the talent pool to drain in an instant and wreck the organization. Collapse can come in a moment. Already, various slanders are pouring out and lists of those marked for dismissal are reportedly circulating — a worrying sign. With the stock market in a bull run and capital markets shifting rapidly, the two months lost to a delayed CEO appointment, during which momentum briefly weakened, feels like a waste.
Two years on, a new nominating committee has been formed, different from the one before. As the committee has stated it "will stick to principles without wavering in order to pick a good candidate," there is little doubt that it will produce a reasonable outcome that everyone can nod to.
