[DLF Disciplinary Action] When Will Sanctions on Son Tae-seung and Ham Young-joo Take Effect? (Comprehensive)

The Financial Supervisory Service Must Notify Parties of Inspection Report for It to Take Effect
Observations After Mid-February... Financial Services Commission's Approval Process 'Under Close Watch'

[Asia Economy Reporter Kim Hyo-jin] The Financial Supervisory Service's Disciplinary Committee has decided on severe sanctions against Sohn Tae-seung, Chairman of Woori Financial Group, and Ham Young-joo, Vice Chairman of Hana Financial Group, in relation to the 'DLF incident,' drawing attention to the timing of the enforcement of these sanctions.

Considering the approval by the head of the Financial Supervisory Service and the resolution by financial authorities, it is expected that the sanctions could take effect sometime after mid-next month.

According to financial authorities on the 31st, among the DLF sanctions decided by the FSS Disciplinary Committee the previous day, the reprimands against Chairman Sohn and Vice Chairman Ham will meet the enforcement requirements upon approval by Yoon Seok-heon, head of the Financial Supervisory Service. In contrast, sanctions against institutions (Woori and Hana Banks) require a resolution by the Financial Services Commission. Both banks received decisions from the disciplinary committee for a six-month partial suspension of operations and fines.

The FSS plans to promptly proceed with the sanction approval process for executives including Chairman Sohn, while soon recommending the sanction proposals against the banks to the Financial Services Commission.

The agenda will then move to the Securities and Futures Commission for review and the Financial Services Commission's regular meeting for resolution. The Securities and Futures Commission and the Financial Services Commission hold alternating regular meetings every Wednesday. The Financial Services Commission's regular meeting is scheduled for next Wednesday (February 5).

Based on these procedures and schedules, it is likely that the sanctions against the banks will be resolved in principle at the regular meeting on the 19th.

The sanctions take effect when the parties receive the inspection report notification from the Financial Supervisory Service. Considering past practice and operational efficiency, the FSS does not plan to notify the executives separately in advance but will notify both matters together once the Financial Services Commission's resolution on the banks is completed.

The timing of enforcement is expected to be particularly sensitive for Chairman Sohn. Last month, Woori Financial recommended Sohn as the next chairman candidate for a three-year term. Accordingly, Sohn was scheduled to be formally appointed at the shareholders' meeting in March.

If a financial company executive receives a severe disciplinary sanction, they may complete their remaining term but will be restricted from employment in financial companies for 3 to 5 years thereafter. If the sanctions take effect next month, Chairman Sohn will lose his eligibility for reappointment.

Although there is an appeal procedure, it does not suspend the enforcement of the sanctions. This is why it is highly likely that administrative litigation and accompanying injunction requests to suspend the effect of the sanctions will be pursued.

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