Amid Turmoil, Woori Financial... It Depends on Chairman Sohn Tae-seung's Decision (Comprehensive)

Breakthrough or Renunciation of Reappointment at a Crossroads
"Support for Sohn Tae-seung" Heats Up Inside and Outside
Concerns Rise Over 'External Intervention' if Departure Occurs

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

[Asia Economy Reporter Kim Hyo-jin] Woori Financial Group is caught in a turbulent situation. Amid growing concerns over governance following the heavy disciplinary action (official warning) related to overseas interest rate-linked derivative-linked funds (DLF), worries about government intervention are also emerging.

The key issue lies in the decision of Sohn Tae-seung, Chairman of Woori Financial Group and CEO of Woori Bank. Although either path is expected to be challenging, voices inside and outside Woori Financial seem to be rallying in support of Chairman Sohn. It is also known that Chairman Sohn has decided to legally challenge the legitimacy of the sanctions and proceed with his reappointment bid as originally scheduled.

According to financial circles on the 6th, Chairman Sohn is holding an informal meeting with outside directors that began in the morning to discuss his position and related matters. This meeting is intended to coordinate agenda items ahead of the regular Woori Bank board meeting scheduled for the 7th. There is a possibility that Chairman Sohn may announce his stance as early as today.

Chairman Sohn was recommended last December as the next chairman candidate for a three-year term. He is scheduled to be officially appointed at the shareholders' meeting on the 24th of next month, but the situation has become complicated due to the 'DLF heavy disciplinary action.' If the sanction takes effect (expected early next month), he can complete the remaining term, but his employment in the financial sector will be restricted for the following three years.

The options are divided between pursuing administrative litigation and related injunctions to suspend the enforcement of the sanctions aiming for reappointment or giving up on reappointment. If Chairman Sohn fails to secure reappointment, Woori Financial's governance structure will be fundamentally shaken. All ongoing procedures, including the selection of the next Woori Bank CEO, will be reset to square one.

Amid these concerns, outside directors representing the major shareholders are reportedly expressing their support for Chairman Sohn. One outside director told this publication in a phone interview, "We prioritize the value of swift organizational stability and Chairman Sohn's intentions."

A senior Woori Financial official said, "Even when the possibility of heavy disciplinary action due to the DLF incident was anticipated at the end of last year, the directors trusted Chairman Sohn and recommended him as the next chairman," adding, "It does not seem that trust in Chairman Sohn will be shaken by the disciplinary decision."

The Woori Bank labor union, which rose to become the third-largest shareholder through the employee stock ownership association, is also showing strong support for Chairman Sohn. Recently, the union harshly criticized the Financial Supervisory Service's 'DLF heavy disciplinary action' decision as a "strategy to evade responsibility, focusing solely on punishing financial companies while ignoring the root causes of the incident," and announced plans for a "strong struggle."

On the 31st of last month, the union filed a report for a one-month assembly in front of the Financial Supervisory Service in Yeouido, Seoul. If Chairman Sohn fails to be reappointed, the union plans to start protests centered around assemblies.

The background to this atmosphere is the concern that if Chairman Sohn departs, government intervention led by financial authorities will intensify. This is because the positions of both the group chairman and Woori Bank CEO would be vacant simultaneously, creating a 'no-man's land' scenario.

A financial industry insider said, "The government has ample room to intervene based on its stake in Woori Financial," adding, "There are already rumors about potential candidates for the next chairman and political interference." The government holds a 17.25% stake in Woori Bank through the Korea Deposit Insurance Corporation.

Another financial insider analyzed, "Whether one likes it or not, the head of a financial group is a political position," and "Most Woori Financial members likely see Sohn Tae-seung's reappointment as the first step toward full privatization."

The insider also pointed out, "The Financial Supervisory Service's disciplinary review committee decided on heavy sanctions with a very proactive interpretation of regulations despite controversy. I wonder if they anticipated that this decision would become a significant trigger for government intervention surrounding Woori Financial."

This content was produced with the assistance of AI translation services.