Shinhan chief cleared of corruption charges

Chairman to extend another term after clearing legal issue

Shinhan Financial Group Chairman Cho Yong-byoung has cleared away a major legal issue before extending his term, as the Supreme Court acquitted him on corruption charges in the lender’s hiring practices.

The court issued the ruling on Thursday, enabling the Shinhan chief to serve for a third term after ending his tenure next March.

Cho and six other human resources team employees at Shinhan Bank were charged with exerting unfair influence in the lender’s recruitment process in 2018. The prosecution accused them of the corrupt recruitment of sons and daughters of ranking government officials and lawmakers in 2015 and 2016 when Cho served as the leader of the lender. He has since appealed to a Seoul court to prove his innocence.

“The Shinhan chief is widely expected to serve another term with no difficulties after overcoming the legal obstacles,” a financial industry source said. Following the court’s decision, Financial Supervisory Service (FSS) Governor Lee Bok-hyun said he respects the top court’s ruling on Cho.

Cho has so far kept a low profile in management activities due to the legal issue, but the latest ruling is expected to help Cho lead the company more aggressively in a neckand-neck race against its archrival, KB Financial Group.

Under the leadership of Cho, Shinhan Financial Group has set a new earnings record each year. Shinhan logged 2.91 trillion won in net profit in 2017 when Cho took office as the new leader of the group.

The figure has since been on the gradual rise on its solid growth in the cash-cow banking business. Last year, the company generated more than 4 trillion won in net profit for the first time.

Shinhan maintained its status as Korea’s most profitable banking group in 2018 and 2019, but has since lost the race to KB for the past two years. KB still stayed slightly ahead of Shinhan in first-quarter net profit.

Given that Shinhan remained passive in its business expansion due to Cho’s legal issue, he will engage in a more aggressive set of management activities in the latter half of this year, with the focus on winning back the title as the top financial group here.

Shinhan’s rapid expansion in the non-banking sector is noteworthy. In 2021, the non-banking affiliates of Shinhan accounted for more than 42 percent of the group’s annual net profit, the highest level among commercial banking groups here.

For this year, Shinhan is also widely forecast to set a new earnings record again on rising interest rates and the group’s robust non-banking portfolio. In particular, Shinhan will be able to reap additional profits of around 460 billion won from the sale of Shinhan Investment’s office building on Yeouido in Seoul.

The company is also extending its winning streak in its overseas business. According to data from the FSS, Shinhan Bank’s 10 overseas branches in countries such as the United States, China and Indonesia generated a combined net profit of 256.8 billion won last year, up 9.7 percent from the previous year.

Shinhan is also considered to have taken aggressive steps toward digital transformation after the outbreak of the pandemic. Under the leadership of Cho, Shinhan has urged staff to embrace the digital paradigm shift by introducing a series of digital performance indexes for management.

But he is also tasked with boosting its weak stock performance. Shares of Shinhan Financial Group have been on a downward trajectory this month. Shinhan shares closed with a drop of 2.11 percent on Thursday. The stock price of Shinhan hovered around 43,000 won earlier in June, but has since lost momentum for a rebound.

Under the leadership of Cho, Shinhan Financial Group has set a new earnings record each year.