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Hana chief faces double whammy of sanctions

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Published : 2014-06-11 21:14
Updated : 2014-06-11 21:14

Financial regulators are expected to soon announce additional penalties for Hana Bank CEO Kim Jong-jun in a move that is expected to apply further pressure on Kim to step down from his post.

“We are not yet permitted to discuss the result (of an ongoing probe into Hana Bank) but given the seriousness of the Hana Bank case, the CEO is most likely to be subject to penalties,” an FSS official said Tuesday.

In July, the Financial Supervisory Service will hold a disciplinary committee to decide on the scope of Kim’s role in the bank’s involvement in a massive loan fraud, officials said Wednesday.

Whether it is light or severe, the punishment is expected to deliver a blow to Kim as he was already given a heavy punishment in April for allegedly inappropriate investments in the financially distressed Mirae Savings Bank in 2011.

He was issued with a “warning” ― the third-strongest measure of five levels ― which bans him from working for financial institutions for three to five years.

Kim nevertheless refused to step down and pledged to finish out his term, which expires in March.

“The CEO’s absence during these difficult financial situations may cause direct harm to the organization,” he said.

Hana Bank also came under fire in March after being found to have extended more than 160 billion won ($157.3 million) to a KT Corp. subsidiary, KT ENS 00, since 2009 using a fake loan application.

Due to the belated effect of the faulty loan, the bank’s net profit fell to $192.7 billion won in the first quarter this year, down 33.1 percent on-year, according to officials.

On top of the financial losses incurred by Hana and the other banks involved, the management at the institutions will have to face disciplinary government action for failing to properly assess the loan risks.

The financial watchdog has launched an extensive investigation into the loan fraud case to help end financial scandals in the country.

Industry watchers commented that the financial watchdog appeared to be determined to oust the Hana chief by applying added pressure.

Meanwhile, Kim’s resistance was seen as reflecting the stance of former Hana Group chairman Kim Seung-yu, who was suspected to have pressured then-Hana Capital chief Kim to approve the investment.

“I don’t understand why the FSS is acting in this manner,” former chairman Kim told reporters in April, displaying his disapproval of the watchdog’s mounting pressure.

By Suk Gee-hyun (monicasuk@heraldcorp.com)

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