DLF 3rd Disciplinary Hearing Held Today... Disciplinary Levels for Woori and Hana Banks Expected to Be Finalized

On the 16th, when the Financial Supervisory Service's Disciplinary Committee regarding the overseas interest rate-linked derivative-linked fund (DLF) incident, which caused large-scale principal losses, was held, members of the DLF Victims Countermeasure Committee and the Financial Justice Solidarity held a press conference in front of the Financial Supervisory Service in Yeouido, Seoul, demanding severe disciplinary actions against Woori Bank and Hana Bank. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kangwook Cho] The third meeting of the Financial Supervisory Service’s (FSS) Disciplinary Committee regarding the overseas interest rate-linked derivative-linked fund (DLF) scandal, which caused massive principal losses, will be held on the 30th. In this disciplinary meeting, the level of sanctions against Woori Bank, Hana Bank, and the management of these banks is likely to be decided.

The FSS will hold the third DLF Disciplinary Committee meeting from 2 p.m. to review the corrective measures following the sector inspections of Woori Bank and Hana Bank.

Previously, the FSS concluded the hearing procedures against Sohn Tae-seung, Chairman of Woori Financial Group and CEO of Woori Bank, and Ham Young-joo, Vice Chairman of Hana Financial Group, through two disciplinary meetings held on the 16th and 22nd.

The FSS has already pre-notified the management, Chairman Sohn and Vice Chairman Ham, of the severe disciplinary action of a 'written warning.' The main grounds for the sanctions are 'lack of internal control' and 'excessive management pressure.'

In this third disciplinary meeting, the level of sanctions against Woori Bank, Hana Bank, and their management is expected to be finalized.

Since the FSS completed the hearing procedures against Chairman Sohn and Vice Chairman Ham in the first and second DLF disciplinary meetings, it is reported that the focus of this meeting will be on finalizing the level of sanctions.

The outcome of the disciplinary committee will affect the positions of Chairman Sohn and Vice Chairman Ham. If the severe sanction of a written warning is confirmed for Chairman Sohn, he will be unable to be reappointed as chairman, and Vice Chairman Ham will be barred from running for the next chairman position.

However, this case involves both individual and institutional sanctions, which is a variable factor. If an institutional severe sanction is imposed, it requires approval at the regular meeting of the Financial Services Commission (FSC). Whether the FSC will hold a regular meeting before the Woori Financial Group shareholders’ meeting to notify the severe sanction could determine Chairman Sohn’s position.

An official from the financial authorities stated, "Since both individual and institutional sanctions are involved, if severe sanctions are imposed, the process must go through the FSC’s regular meeting, so it may take about a month before the final results are notified."

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