DLF 3rd Sanction Review and New Woori Bank President Recommendation... Busy End of January for Woori Financial Group (Comprehensive)

3rd 'DLF Disciplinary Hearing' on 30th... Decision May Be Made That Day
Attention on Possible Impact on Chairman Sohn Tae-seung's Position if Severe Sanctions Imposed
Final Candidate for Next Woori Bank President to Be Selected on 31st

[Asia Economy Reporter Kim Hyo-jin] Woori Financial Group faces a critical turning point related to its management structure at the end of this month. While the level of sanctions for Chairman and CEO Sohn Tae-seung regarding the 'Derivative Linked Fund (DLF) penalties' is likely to be decided, the final candidate for the new president of Woori Bank, the group's core, will be selected. The DLF sanctions could affect Chairman Sohn's reappointment, and the appointment of the new Woori Bank president is noteworthy as it will bring fundamental changes to the group's management structure.

According to the financial sector on the 28th, the Financial Supervisory Service (FSS) will hold the third disciplinary review committee on the 30th regarding the DLF loss incident. The level of sanctions against Chairman Sohn could be determined as early as this review.

Since the FSS preliminarily notified Chairman Sohn last month of the possibility of a severe disciplinary action called a 'written warning,' Woori Financial Group has made every effort in the past two disciplinary reviews to lower the level of sanctions through arguments and explanations. If the written warning is confirmed, Chairman Sohn can complete his remaining term but will be restricted from employment in the financial sector for 3 to 5 years thereafter.

The Woori Financial Executive Candidate Recommendation Committee recommended Chairman Sohn last month as the next chairman candidate for a three-year term. The reappointment will be decided at the shareholders' meeting in March, but if the written warning is confirmed before then, a prolonged dispute through administrative litigation may ensue, potentially disrupting the execution of the next chairman's duties depending on the developments.

The FSS is pressuring Chairman Sohn based on the Financial Company Governance Act, which stipulates that 'financial companies must establish internal control standards.' Chairman Sohn's side is known to have refuted the grounds for such sanctions during the disciplinary review and appealed against the unfairness of bearing almost full responsibility as chairman or bank president.

On the following day, the 31st, the group's Executive Candidate Recommendation Committee will finalize and recommend the new Woori Bank president candidate. This marks crossing the final hurdle to conclude the 'group chairman + Woori Bank president dual leadership system.' The committee consists of Chairman Sohn as the chairman and five outside directors: No Seong-tae, Park Sang-yong, Jeong Chan-hyeong, Jeon Ji-pyeong, and Jang Dong-woo.

The committee decided last month to separate the group chairman and Woori Bank president roles. This decision implies that Chairman Sohn takes proactive responsibility regardless of the DLF sanctions to minimize management uncertainty.

Earlier, on the 22nd, the committee narrowed down a total of seven candidates in the 'longlist.' These include Jung Won-jae, president of Woori Card; Jo Un-haeng, president of Woori Comprehensive Financial; Jeong Chae-bong, head of Woori Bank's sales division; Lee Dong-yeon, president of Woori FIS; Kim Jeong-gi, head of Woori Bank's sales support division; Kwon Kwang-seok, CEO of Saemaeul Geumgo Central Credit Guarantee; and Lee Dong-bin, president of Suhyup Bank.

Inside and outside Woori Financial, the recommendation of an internal candidate is strongly discussed. This is because it is necessary to reorganize the organization unsettled by the DLF incident, respond to the financial authorities' strengthened consumer protection policy, and smoothly coordinate with Chairman Sohn. Since Woori Financial has set 'restoring customer trust' as its management policy this year, there is a possibility that emphasis will be placed on enhancing operational stability and strengthening internal capabilities.

Son Tae-seung, Chairman of Woori Financial Group and President of Woori Bank

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