Emperor Soldier and FSC Sanctions...NICE's Credibility Plummets

Controversy Over Vice Chairman's Son as 'CEO Risk'
NICE Investors Service Imposes 'Institutional Warning'
Stock Price Drops 18.6% in the Past Month

[Asia Economy Reporter Park Jihwan] Nice Financial Group, which operates credit rating business as its core along with financial services and manufacturing, is facing a difficult situation due to a series of recent image-damaging incidents. CEO risk emerged from the controversy over the "Emperor Soldier" involving Choi, the son of Choi Young, Vice Chairman of Nice Group, and its affiliate Nice Credit Rating was also sanctioned by financial authorities for mishandling credit rating tasks. Since all these issues are closely related to credibility, the group’s image, centered on the credit rating business, has inevitably suffered a decline.

According to financial authorities on the 17th, Nice Credit Rating received a 'institutional caution' sanction from the financial authorities for applying its own credit rating instead of the legally mandated local government credit rating under the Capital Market Act when evaluating corporate bonds and commercial papers of companies. In 2018, Nice Credit Rating conducted five credit ratings for Company A, a public enterprise overseas, including two corporate bonds and three commercial papers. When measuring the 'government support possibility evaluation index,' they applied their own credit rating instead of the final credit rating of the local government, which is the support entity, resulting in a final rating downgraded by one notch. The internal credit rating reflects only the company’s own debt repayment ability before determining the final credit rating that incorporates government support possibility.

Additionally, Nice Credit Rating made errors during the 2017-2018 evaluation of Company B’s four corporate bonds and two corporate credit ratings. Although the upper limit for rating adjustments based on future business, financial, and performance outlooks is set within one notch, they adjusted the credit rating two to three notches higher. This was revealed during inspections of the four major domestic credit rating agencies conducted by the Financial Supervisory Service last year. For Nice Credit Rating, this outcome was particularly painful as competitors like Korea Ratings and Korea Investors Service avoided such sanctions.

The "Emperor Soldier" issue, which has recently been at the center of controversy, is also a burden. The soldier’s father, Vice Chairman Choi, is a figure who served as President of Nice Holdings and was promoted to Vice Chairman of Nice Group in December last year. Until he tendered his resignation the day before, Vice Chairman Choi had been serving as Vice Chairman of Nice Information Service and co-Vice Chairman of the group. After the group owner, the late Chairman Kim Kwang-soo, passed away in 2018, leaving the chairman position vacant, he effectively managed the overall group operations.

The stock price of Nice Information Service, which had gained momentum due to expectations of increased demand for credit information data following the implementation of the Three Data Laws and the rise of MyData operators, is also showing a sluggish trend. The stock price, which rose to 22,100 KRW in mid-last month, has fallen 18.6% over the past month. As of 9:20 AM today, Nice Information Service recorded 18,000 KRW, down 1.91% from the previous day.

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