January critical month for banking group chiefs

From left, Shinhan Financial Group Chairman Cho Yong-byoung, Hana Financial Group Vice Chairman Ham Young-joo, Woori Financial Group Chairman Son Tae-seung and Industrial Bank of Korea CEO Yoon Jong-won / Korea Times file

By Kim Bo-eun

The month of January has put major banking groups on alert, as it may determine sanctions imposed on their chiefs that may affect their terms.

Shinhan Financial Group Chairman Cho Yong-byoung faces a lower court ruling Jan. 22, over charges relating to hiring irregularities.

He is suspected to have intervened in the process of recruiting new employees and manipulated scores to get the children of the bank's executives hired when he was CEO of Shinhan Bank. The prosecution earlier sought a three-year prison term and 5 million won fine for Cho.

The chiefs of Woori and Hana financial groups face sanctions for their responsibility in the "DLF fiasco" in which banks mis-sold financial derivative options known as derivative-linked funds that caused major losses for investors last year.

Hana Financial Group Vice Chairman Ham Young-joo and Woori Financial Group Chairman Son Tae-seung attended a meeting at the Financial Supervisory Service (FSS) last week, held to determine the level of sanctions that will be imposed.

Another meeting is set to be held this week, as the one last week failed to agree on the sanctions.

The FSS is seeking to issue a warning for both, which would ban them from serving new terms for three to five years.

This would be a problem for Woori, which put forward Son as the sole candidate to serve as the group's chairman this year.

The financial groups will likely take legal action if the FSS imposes the intended sanctions on the chiefs. They have contended that the legal grounds for punishing the management are insufficient.

The month of January is also proving to be a trial for the new chief of the Industrial Bank of Korea Yoon Jong-won.

Yoon began his term Jan. 3, but has been unable to conduct his duties at his office at the bank due to opposition by the bank's union over his appointment.

He has commuted to the Korea Banking Institute instead for the past 16 days.

The union has been refusing to accept Yoon as the bank's CEO, as he was not appointed from within the bank. Yoon was formerly the presidential secretary for economic affairs.

IBK's chiefs have been appointed from within the bank since 2010.

The union is taking issue with the practice of “parachuting government officials” into the bank's CEO position, stating this is a violation of an election pledge by Moon Jae-in.

However, as a state-run lender, the government holds authority over appointing the bank's chief.

President Moon reiterated this, when asked about the issue at a press conference last week.