Woori Financial Group is taking a cautious approach in naming the new chief of its flagship banking business due largely to the recent debacle involving the sale of high-risk private funds, according to industry sources Wednesday.
The group initially planned to complete the appointment of an Woori Bank CEO before the Lunar New Year holidays, which fall Jan. 24-27.
The Financial Supervisory Service is scheduled to convene a meeting Thursday to decide the punishments for the heads of two local commercial lenders, Woori Bank and KEB Hana, for misspelling derivatives-linked funds and securities.
Woori Financial Group Chairman and Woori Bank CEO Sohn Tae-seung (Woori Financial Group)
They have received public flak for failing to sufficiently warn customers of the high risks of the financial products, which eventually led them to lose most of their investments.
“There is a possibility that the appointment of the new banking chief may take place after the Lunar New Year holidays, though we are trying our best to complete all leadership appointments before that,” an Woori Financial spokesperson told The Korea Herald.
“The shortlisted candidates are mostly current CEOs of our subsidiaries and directors of our banking branches,” the spokesperson added.
Meanwhile, an internal committee announced on Dec. 30 that incumbent Woori Financial Chairman and Woori Bank CEO Sohn Tae-seung would serve his second term only as the holding company’s chairman.
Sohn, who became Woori Bank’s chief executive in 2017 and was appointed Woori Financial chairman in 2018, will likely step down from his CEO post in March.
The financial watchdog’s sanctions are expected to be a major hurdle for the group’s plans to appoint a new banking chief as the FSS has warned it is considering levying strict penalties on Sohn and Ham Young-joo, vice chairman of Hana Financial Group.
Both have received “disciplinary warnings,” the watchdog’s toughest sanction except for dismissal and suspension from duties. Those who receive any of the three penalties are banned from holding executive positions at any financial firm for up to five years. However, the warnings are not final and could still be overturned.
The review committee will hold an additional meeting Jan. 30 if it fails to reach a final decision on the punishments this week.
Regarding the committee’s meeting, FSS Gov. Yoon Suk-heon told reporters on Tuesday that he would “respect the outcome of the meeting.”
The derivative products that caused a fiasco last year were structured to track the performance of constant maturity swaps of US or UK Treasury bonds. There were options also tied to the yield of Germany’s 10-year state bonds.
The FSS recommended last year that banks compensate customers for up to 80 percent of their losses.
By Jung Min-kyung (firstname.lastname@example.org