Woori Financial Group Chairman Sohn Tae-seung (Yonhap)
South Korea’s Woori Financial Group on Thursday said its current chief would maintain his role for the time being despite sanctions imposed by financial authorities for misselling of derivatives-linked funds.
The announcement came as a result of a preliminary board meeting, on the eve of the regular board meeting scheduled Friday. Woori Financial’s seven board members, including Chairman Sohn Tae-seung, gathered with the goal of releasing a statement conveying the chairman’s decision, a Woori official said.
“We believe it is inappropriate to voice our opinion under the current situation where the Financial Services Commission’s process remains and Sohn has yet to receive an official notice,” the board said in a statement.
“Thus, we have no reason to change our initial process and schedules concerning Woori Financial Group’s governance,” it added.
The Financial Supervisory Service on Monday finalized its decision to slap Woori Financial Group and Woori Bank CEO Sohn Tae-seung with one of its heaviest sanctions for the lender’s misselling of derivatives-linked funds last year that led to huge losses for investors. Hana Financial Group Vice Chairman Ham Young-joo was also reprimanded with the same sanctions.
The type of sanctions bars its subjects from working in the financial sector for three to five years -- although the current term can be completed.
Following the FSS sanctions committee’s first announcement on Jan. 30 to reprimand Sohn and Ham, Sohn reportedly told the board that he “needed time” to decide on the course of action he would prefer to take.
Industry watchers said that the Woori Financial board’s statement embodies Sohn’s willingness to file an injunction against the financial authorities’ decision, in an attempt to either delay or annul the FSS sanctions.
The board is expected to follow through with Sohn’s reappointment as the holding group’s chairman, which was proposed by the external board in December and is awaiting confirmation at the shareholders meeting on March 24.
The sanctions will take legal effect once the related notice is delivered to the subjects which will allow Sohn to kick off his second term as chairman if he receives the note after the March shareholders meeting.
The lawsuit, if filed, is likely to further sour Woori Financial’s relationship with the financial authorities, putting the holding group at the risk of receiving heavier punishments with its other cases under watchdog scrutiny.
Woori Bank and Hana Bank were among key sales channels of Lime Asset Management’s now-frozen derivative-linked funds, which inflicted huge financial damages on investors last year. The FSS is currently investigating the case, in which the local fund operator has frozen up to nearly 2 trillion won of its portfolio, due to liquidity issues and its failure to hedge risks.
The Woori Financial board and its union have expressed support for Sohn from the reappointment nomination to the time leading up to and after the FSS’ latest sanctions announcement.
The policymaking FSS is currently reviewing the matters at hand and said it would complete the sanctions process against Sohn and Ham by early March.