Hana and Woori banks penalized by FSCRecord penalties for two of Korea’s largest banks were upheld by the regulator, though the amount of the fines were reduced for both.
The penalties are related to a scandal in which Hana Bank and Woori Bank employees pushed high-risk investment funds on clients without properly informing them about the dangers of buying into those funds.
The funds collapsed, and investors lost much of their principal.
The Financial Services Commission (FSC) fined Woori Bank a 19.7 billion won ($16.6 million), down 3 billion won from what the Financial Supervisory Service (FSS) had initially proposed. Hana Bank was fined 16.7 billion won, 8.7 billion won down from the initial proposal.
It also upheld reprimands recommended by the FSS for Woori Financial Group Chairman Sohn Tae-seung and Hana Financial Group Vice Chairman Ham Young-joo.
The regulator said the banks had the responsibility to explain the risks to the investors and should have had better controls in place.
The two banks were ordered to suspend sales of new funds for six months through Sept. 4.
Reprimands will go into effect once the FSS delivers them to the lenders within 10 days.
The decision by the FSC threatens the leadership of banks as the reprimands prevent Sohn and Ham from being reappointed to their posts for at least three years.
They, however, can finish their current terms.
Woori Financial Group’s board is supporting Sohn and will reappoint him as chairman at the annual general meeting of the company on March 25. A legal confrontation between the financial group and the regulators is now a possibility.
The term of Hana Financial Group Vice Chairman Ham finishes at the end of the year, and he may be a candidate for the chairmanship, so Hana could also clash with the regulators.
BY JIN EUN-SOO [firstname.lastname@example.org]
More in Finance
CU gets into the foreign exchange transaction business
Kospi hits another record high despite Covid spike
5-day winning streak ends as Kospi drops 0.62 percent
Debt is the latest hot product being pushed into the market
China's WeChat Pay and Seoul's Zero Pay now interoperable