Woori Financial Group Chairman Yim Jong-yong responds to reporters in the lobby of the group headquarter in Seoul in this March 24, 2023, file photo. Yonhap

Woori Financial Group Chairman Yim Jong-yong seems to be fortifying efforts to cement his grip on leadership, as indicated by the exclusion of Woori Bank CEO Cho Byung-kyu from the group's board, market watchers said Thursday.

The group maintains the decision finalized at the shareholders' meeting last week is part of a group-wide growth strategy, best encapsulated by the separation of business priority between the group and the bank. The holding firm should oversee the overarching long-term plan formulation whereas the bank subsidiary's extent of reach should be limited to sales, the group says.

The two-track drive comes amid the group's reliance on the bank for income. Woori Bank's net profit came to 2.5 trillion won ($1.8 billion) last year, accounting for over 99 percent of the group's income total. Observers point out that the outsized influence of the bank could hurt the standing of Yim in the group. The appointment of Yim – the former chair of the Financial Services Commission (FSC) – came under tight media scrutiny for his previous stint as the top government regulator, a stigma for a chairman of the profit-motivated entity that remains under the thumb of the government.

Woori is the only one among the county's four financial groups without a bank CEO on the board. Yim and nine outside directors make up Woori's top decision-making body.

Woori Bank CEO Cho Byung-kyu / Courtesy of Woori Bank

"The personnel management of Woori is defined almost always by outside pressure," an industry insider said, pointing out that it means the chairman's grip was already somewhat compromised from the beginning.

The insider said Woori's chairman thus has the motivation to not let any potential opponent have a say in the board meeting, much less "legitimize the bank CEO's presence by giving him a seat at the table."

Cho was not the first to be excluded from the board. Former CEO Kwon Kwang-seok failed to make a board member, despite his two-year term at the bank from 2020 to 2022.

The exclusion was unusual since he was instrumental in resolving the derivative-linked funds fiasco in 2020.

Woori Financial said the limited role of bank CEOs in the group's board is a result of changes in group-wide management strategy.

Cho was directed to prioritize profit generation for Woori Bank to put it at the top of the list of market players.

A Woori official said the bank is "aligning with the goal of becoming the top net income generator among commercial lenders this year."