KB Group, Kookmin Bank execs in FSS crosshairsKB Financial Group Chairman Lim Young-rok and Kookmin Bank CEO Lee Kun-ho were notified by the Financial Supervisory Service at about 1 a.m. yesterday that they will receive heavy punishment for their involvement in the massive leaks of personal customer information discovered in January as well as for other issues.
The FSS said the number of financial industry executives and employees expected to be penalized has expanded to 200, the most ever in the history of the financial authority.
About 50 people will be subject to heavy punishment, according to the FSS, although the details will not be determined until June 26.
The two executives of KB Group were closely watched by the FSS for a series of unethical scams at the bank and for recent internal strife between top management of the group and the bank. FSS Governor Choi Soo-hyun on Monday ordered the most stringent measures for KB in particular before he flew to Japan.
“The number to be punished has increased, as the authority enforces punishment for all financial incidents that occurred since last year,” said an FSS official. “It is true there are many who will get heavy punishments.”
Since the authority considers the leaks of personal information of about 104 million accounts from three credit card companies - Kookmin Card, Lotte Card and Nonghyup Card - so seriously, it is widely expected to impose the strongest-possible penalties on KB Group.
About 53 million of the victims were Kookmin Card customers, and KB employees account for about 120 of the employees facing penalties.
The group also could get an institutional warning, which would ban acquisitions for three years. KB is currently preparing to buy LIG Insurance.
The FSS can impose three types of heavy punishment: dismissal, work suspension and reprimand.
The strongest is the dismissal, which would force the employee to resign and leave the industry for as long as five years. A suspension would prohibit the person from working in the financial industry for a maximum of four years. A reprimand can result in exclusion from the industry for as long as three years.
Executives of Shinhan Bank, Woori Bank, Kookmin Card, Nonghyup Bank, Lotte Card, Citibank and Standard Chartered were also notified of impending penalties.
The affected Shinhan Bank executives and employees illegally searched for the personal information of hundreds of customers.
Woori Bank’s executives will be sanctioned for insufficient documents when launching a new trust product.
Former CEOs of Standard Chartered Bank, Kookmin Card and Nonghyup Bank were also notified of heavy punishments.
Citibank Korea CEO Ha Yung-ku was notified of a light punishment.
Executives and employees at London-based Standard Charted Bank and U.S.-based Citibank will be penalized for the actions of former employees who stole customer information.
KB Financial Group’s Lim and Kookmin Bank’s Lee are likely to be slapped with the stiffest penalties because of recent internal conflicts between the two over changing the bank’s network. The FSS recently investigated conflicts between the two heads as well as unethical scams at Kookmin Bank, including illegal loans at its Tokyo branch.
Once again, KB’s reputation is likely to be seriously damaged given that no former chief of the group has been free from government punishment for wrongdoing.
“Heavy punishment sounds too strong,” said a group spokesman. “The punishment for the chairman has snowballed due to the recent subsequent issues.”
Meanwhile, some in the industry question the effectiveness of heavy punishment by the FSS.
Hana Bank CEO Kim Jong-jun was reprimanded by the FSS in April for an incident in 2011 when Kim, then-CEO of Hana Capital, incurred losses at the company in order to increase capital at Mirae Savings Bank. Yet Kim is expected to remain on the job until early next year.
BY song su-hyun [firstname.lastname@example.org]
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