Woori Financial Group Receives Caution from Financial Supervisory Service for Violating Subsidiary Inclusion Reporting Requirements

Failure to Report Subsidiary Inclusion
Violation of Outsourcing Reporting Obligations

The Financial Supervisory Service announced on the 16th that it has issued a cautionary measure to Woori Financial Group for failing to report the inclusion of a subsidiary and for violating the reporting obligations regarding the outsourcing of work to subsidiaries.

According to the Financial Supervisory Service, in March of last year, Woori Financial Group's subsidiary, Company H, acquired a 49.55% stake in Company I and incorporated it as a second-tier subsidiary, but failed to report this to the Financial Supervisory Service within 30 days.

Under the Financial Holding Companies Act, a financial holding company must report to the Financial Supervisory Service within 30 days from the date of inclusion when it incorporates as a subsidiary a financial institution that does not require approval from the Financial Services Commission at the time of establishment, a financial institution with total assets of less than 100 billion won as of the end of the most recent business year, or a company closely related to the conduct of financial business. Woori Financial Group violated this requirement.

The Financial Supervisory Service also pointed out that Woori Financial Group violated its reporting obligations regarding the outsourcing of work to subsidiaries. In April 2022, Woori Financial Group reported in advance to the Financial Supervisory Service about an IT work outsourcing contract signed among its subsidiaries, but did not report similar IT outsourcing contracts signed later with other subsidiaries.

According to the Financial Holding Companies Act, if a financial holding company outsources work that is not essential to the financial business and poses little risk of risk transfer, conflict of interest, or harm to the soundness of the financial company among its subsidiaries, it must report to the Financial Supervisory Service at least seven days before the date the work is actually to be performed.

Furthermore, if the content of the newly outsourced work is identical to a previously reported case and the main business type of the outsourcing or outsourced subsidiary is the same, the company must submit a post-report to the Financial Supervisory Service by reporting the status of such outsourcing among subsidiaries within one month after the end of each half-year period. Woori Financial Group failed to comply with this obligation as well.

The Financial Supervisory Service notified two employees responsible for the related work to complete compliance training and explained that the cautionary measure would be waived if they complete the training as required.

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