Eun Sung-soo, Financial Services Commission Chairman, on DLF Disciplinary Action: "I Will Ensure No Misunderstanding"

[Asia Economy Reporter Kim Min-young] Eun Sung-soo, Chairman of the Financial Services Commission, said on the 10th regarding Sohn Tae-seung, Chairman of Woori Financial Group, who is virtually on the path to reappointment, “We (the FSC) will do our job.”

Eun Sung-soo, Chairman of the Financial Services Commission, is delivering opening remarks at the 'Foreign Financial Companies Representatives Meeting' held on the 10th at the Conrad Hotel in Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

After a luncheon meeting with CEOs of foreign financial companies held at the Conrad Hotel in Yeouido, Seoul, Chairman Eun responded to reporters' questions about “Chairman Sohn showing moves to forcibly proceed with reappointment through litigation” by saying, “At last Friday’s (7th) Woori Financial Board meeting, I only know that the Financial Supervisory Service (FSS) has not yet notified sanctions, so it is premature,” and added, “If the institutional sanctions part is transferred to the FSC, we will do our job within the given time to avoid misunderstandings as much as possible.”

Earlier, on the 30th of last month, the Financial Supervisory Service imposed a heavy disciplinary action of a ‘reprimand’ on Chairman Sohn through the Overseas Interest Rate-Linked Derivative-Linked Fund (DLF) disciplinary review committee. This sanction was finalized on the 3rd when FSS Chairman Yoon Seok-heon approved it.

It is known that Chairman Sohn made the decision to seek reappointment after much deliberation regarding his position, and the Woori Financial Board has initiated the reappointment procedure. On the 11th, the next candidate for Woori Bank President, a concurrent position held by Chairman Sohn, is also scheduled to be appointed. This is effectively a rejection of the disciplinary action.

The FSC will only decide in upcoming meetings whether to impose a six-month partial suspension of operations on Hana Bank and Woori Bank and whether to levy fines of 26 billion KRW and 23 billion KRW respectively. Disciplinary actions against Chairman Sohn and other executives are already finalized and will not be discussed. The meeting will be attended by Chairman Eun, Chairman Yoon, and standing commissioners.

Regarding the controversy over the ‘FSC passing over’ that occurred during this sanction process, Chairman Eun said, “I think that was created by the reporters,” and added, “Saying the FSC was passed over is not an appropriate expression.”

In response to questions about the 2018 incident where Woori Bank changed customers’ passwords without authorization, he said, “Since the FSS is aware of that part as well, I think it will proceed according to the procedure,” and regarding criticism that the FSS Chairman’s authority to make decisions independently could be interpreted too broadly and abused, he said, “I will think about what is reasonable and appropriate.”

Chairman Eun also commented on the sale of Woori Financial shares (17.25%) held by the Korea Deposit Insurance Corporation (KDIC), saying, “We will observe the market situation.”

Last year, the government announced a share sale roadmap to fully privatize Woori Financial by 2022, planning to sell KDIC shares in two to three rounds and decided to conduct the first sale of about 4% of Woori Financial shares in the first half of this year. However, due to the turmoil in Woori Financial’s governance following the disciplinary review, the timing of the sale has become uncertain. As of the closing price on the 7th, Woori Financial’s stock price was 10,300 KRW, which is known to be far below the minimum price the government is considering for the sale.

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