Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Woori marred by poor internal control systems
Group to keep Son as chief until FSC finalizes sanctions
By Kim Bo-eun
Woori Bank's headquarters in central Seoul / Korea Times file
By Kim Bo-eun
A series of incidents involving Woori Bank has shown how consumer protection can be compromised under poor internal control systems.
The latest revelation is a case in which a bank employee changed the personal identification number (PIN) of over 20,000 customer accounts, in an attempt to make it appear as if customers had begun new transactions with the bank.
In competition with rival banks, Woori had increased the number of mobile banking customers by encouraging people to download their mobile bank applications. But many of these people only downloaded the apps and did not use them.
Customers that have not made transactions for a certain period of time need to reset their PIN number when they wish to resume transactions. This is why the bank counted new transactions based on changes in PIN numbers.
Under sales pressure, the bank employee is known to have changed the PIN number of about 23,000 customer accounts in the first half of 2018.
Regarding the case, a bank official said "We found out about what the employee had done and reported the case to the Financial Supervisory Service in October the same year."
"The FSS concluded that it would not take punitive measures for the case."
But Woori's malfunctioning internal control system did not change after the incident.
Woori sold the largest scale of high-risk investment products referred to as derivative-linked funds that caused major losses for investors last year.
Investors of the options-based funds that were tied to the yields of underlying assets such as German treasury bonds saw as much as 98 percent of their principal wiped out, due to the fall in interest rates. The bank sold the option knowing that interest rates were falling, not notifying investors of the risks.
One of the investors was found to be a dementia patient with hearing impairment.
Among banks, Woori was also found to have sold the largest scale of investment options managed by the troubled Lime Asset Management that froze redemption of funds totaling 1.7 trillion won. Investors claim that the financial firms that sold the options failed to notify about their risk.
The FSS imposed sanctions on Woori Financial Group Chairman and Woori Bank CEO Son Tae-seung that bans him from serving positions in the finance sector for the next three years. Son was set to serve a second term as the group's chairman, after being selected as the sole candidate for the position in December. Son's second term was set to be finalized at a general shareholder meeting in March.
Woori group decided Thursday it would keep Son as chief until financial authorities finalize sanctions for both Son and the bank. The FSS finalized punishment for Son this week, but the Financial Services Commission has yet to approve the sanction the bank faces as institution.
Woori has the option of taking legal action against the measure, but this puts the group in a tricky position, as it still needs to deal with financial authorities over other issues. These include the issue over the bank's alleged misselling of Lime's investment options.
But Son stepping down is equally perplexing for the group, as it does not have an appropriate replacement.