KB Financial Group chairman Lim Young-rok expressed complaints about the Financial Supervisory Service’s decision to readjust a penalty and charged that governor Choi Soo-hyun had abused his authority.

“It is incomprehensible that the FSS should hand down a heavy penalty (on KB Financial Group’s top officials),” Lim said in an urgent press briefing on Wednesday.

“The (bank’s) replacement of its computing system is an internal issue that should be dealt with by the group’s management.”

He also criticized the FSS chief for arbitrarily changing the disciplinary board’s decision and stiffening the penalty.

“The (FSS) disciplinary board deliberated on the issue for over two months before it alleviated the penalty,” he said.

“But Choi’s unfounded and unprecedented decision to reject the board’s judgment delivered a fatal blow to KB Financial, which has been striving to normalize its management.”

He also reaffirmed his intention to actively defend himself before the Financial Services Commission confirms the FSS penalty.

Last Thursday, FSS Governor Choi Soo-hyun announced a “reprimand warning” for KB Financial chief Lim and Lee Kun-ho, president of the group’s flagship KB Kookmin Bank.

He thus overturned the earlier decision of the FSS disciplinary board to alleviate the measure to a “notice.”

The “reprimand warning,” which is to ban both officials from taking a post within financial circles for the next three years, is to take effect once the FSC gives its final approval of the FSS decision.

Bank chief Lee immediately offered his resignation upon the FSS announcement but chairman Lim refused to step down and pledged to put the management back on track.

Lim also pointed his finger at Lee for triggering the computing system replacement dispute in the first place.

“The replacement process had been progressing over the past two years but all of it was halted by the bank president’s sudden objection, after he received a personal email from the head of IBM Korea,” he said.

Earlier this year, the financial group was caught up in a feud as the bank’s president vetoed the replacement of the main computing system, citing technical errors and high costs.

The board of directors, allegedly backed by group chairman Lim, resisted and claimed that Lee’s sudden opposition was influenced by IBM, the supplier of the system.

As the feud escalated further, the FSS decided in May to hand down a heavy punishment on both Lim and Lee for mismanagement.

By Bae Hyun-jung (tellme@heraldcorp.com)