BS Financial chairman is forced out

Lee Jang-ho, chairman and chief executive of BS Financial Group, gave in to mounting government pressure and tendered his resignation yesterday.

The government is being criticized for putting indirect pressure on Lee to give up his post even though it doesn’t own a single share in the Busan-based financial group.

“I made a decision that it would be best for me to give my resignation at this time for the sake of the group and regional development,” Lee said, noting that the decision was made after carefully considering advice from people in the region.

“In order to maintain stable development of the group, the next chief executive of BS Financial Group should be someone promoted from within who has a lot of internal experience and knows a lot about the region.”

Last Wednesday, the Financial Supervisory Service released the results of its general inspection of BS Financial Group, the holding company of Busan Bank, and pointed out various “wrongdoings” by its management.

For example, the FSS noted that Lee took on separate roles as head of the group’s risk management committee and head of the group’s charity foundation without notifying or receiving approval from the Financial Services Commission.

It also pointed out that Busan Bank opened and managed 92 bank accounts opened under false names, and around 10 Busan Bank employees searched information about 372 customers for personal purposes.

The FSS also noted that of the 54 executives at BS Financial and its subsidiaries, 24 are from the same high school and university as Chairman Lee, and because of this, Lee was able to remain as chairman for the past eight years.

“We advised Lee to voluntarily retire out of concerns that there would be paralysis of management within the group as a result of Lee clinging to power,” said a senior official at the FSS.

However, though Lee expressed a willingness to resign, there was criticism that the government is intervening too much in a private financial group.

Although there is industry speculation that Busan Bank CEO Sung Se-hwan and BS Financial Group Vice President Lim Young-rok could be promoted to chairman, critics are also flagging the possibility that there could be intervention by the government in the appointment process.

Under the Park Geun-hye government, three chiefs of financial groups either stepped down or expressed their willingness to do so including Kang Man-soo, former chairman of the Korea Development Bank, Lee Pal-seung, chairman of Woori Financial Group, and Euh Yoon-dae, chairman of KB Financial Group.

The Korean Financial Industry Union released a statement yesterday, criticizing the Park administration for trying to control the country’s financial industry.

BY LEE EUN-JOO [angie@joongang.co.kr]