FSS targets defiant Hana Bank CEO

The Financial Supervisory Service plans to impose additional punishment on Hana Bank CEO Kim Jong-jun next month, adding to mounting pressure on him to step down.

According to the FSS and those in the financial industry yesterday, the authority will add punishment for Kim’s involvement in a loan scam to an employee at KT ENS, a subsidiary of No. 2 mobile carrier KT.

In April, Kim was given a reprimand by the FSS for incurring losses at his former company. It is the authority’s third-toughest penalty and bans a person from working in the industry for as long as three years.

In addition, a recent FSS investigation into Hana Bank found the CEO was involved in the KT ENS issue.

The FSS and police said in February a 51-year-old official of KT ENS identified as Kim was under investigation for allegedly embezzling 280 billion won ($260 million) in loans issued to a company set up by the KT unit’s contractors. The company was created to cash accounts receivable bonds. The loans were from Hana, KB, NH and 10 savings banks.

Hana Bank reportedly lent 160 billion won to the dubious company, which caused the group’s first-quarter net profits to fall 33.1 percent compared to a year earlier.

“Since the scam was so large and serious and it happened due to lax management at the bank, it is natural that its top management will be considered for punishment,” said an FSS official.

Kim’s term ends in March, and he has vowed to finish it despite the reprimand.

The financial watchdog has been recently tightening its supervision on the financial industry by imposing heavy or light punishments on chiefs of major institutions.

On Monday and Tuesday, 10 CEOs of major banks were notified they will face punishment for their past wrongdoing.

The total number of executives and employees to be punished surpassed 200, the most ever in the industry’s history.

The FSS told CEOs and executives to come up with explanations by June 26, when final punishment decisions will be made.

KB Financial Group Chairman Lim Young-rok, Kookmin Bank CEO Lee Kun-ho, Citibank Korea CEO Ha Yung-ku and former CEOs of Standard Chartered Bank, Kookmin Card and Nonghyup Bank were included.

By song su-hyun [ssh@joongang.co.kr]