Woori chairman pressured to step down

Woori Financial Group Chairman Son Tae-seung / Korea Times file

By Kim Bo-eun

Woori Financial Group head Son Tae-seung is being pressured to step down after the Financial Supervisory Service (FSS) sanctioned him for Woori Bank's involvement in the “DLF fiasco.”

The FSS stated last week that it would impose sanctions on Son that would bar him from serving in the finance sector for three years.

This would mean he would be unable to serve a second term as the group's chairman, which was a given as Son was the sole candidate for the position. A general shareholders' meeting in March had been set up to approve Son serving a second term.

The FSS sanctions have yet to be signed off on by the agency's governor Yoon Suk-heun, but he is expected to uphold them as he has implied that the chiefs of financial firms need to be held accountable for the DLF scandal. This involved the mis-selling of high-risk investment options ― derivative-linked funds (DLFs) ― that caused major losses for investors.

In December, Yoon said sanctions needed to “send the right signal to the market” by which he meant they needed to be weighty in order to prevent a recurrence.

Woori Financial Group is set to hold a board meeting Friday, where a decision regarding Son will be made.

Son currently doubles as group chairman and Woori Bank CEO but the group decided it would separate the positions. The group had intended to decide on the final candidate for Woori Bank CEO last week, but put off the decision after the FSS announced the sanctions.

Woori has the option of taking legal action against the financial authorities over the sanctions,

Woori Financial Group's headquarters in central Seoul / Korea Times file

but Son will likely feel uneasy remaining in his position, given that Woori Bank still has to deal with the financial authorities over other incidents. These include the bank mis-selling currency-linked financial derivative products referred to as knock-in-knock-out (KIKO) contracts, and selling investment options managed by Lime Asset Management, which the FSS is looking into.

Woori Financial has set mergers and acquisitions as a top priority for this year to scale up the group's portfolio, and this requires gaining approval from the financial authorities. This may be compromised if Son retains his post.

In the past, financial firm chiefs who were sanctioned mostly stepped down; but Woori does not have anyone in mind to replace Son in that event.

Son, who had been in charge of Woori's global business prior to assuming his current position, had pledged to boost the group's overseas expansion this year, and actively seek M&As both here and abroad. It is unclear whether the group will be able to carry through with these plans without him.

Meanwhile, Woori's price per share crashed to an all-time low of 10,150 won Friday, a day after the FSS announced the sanctions.

The price of Woori shares continued on a downward trend last year after marking a high of 16,000 won on Feb. 14 2019, one month after the group launched a holding company.