Woori union supports Son in fear of government control

Woori Financial Group Chairman and Woori Bank CEO Son Tae-seung, right, and Woori Bank union leader Park Pil-joon pose after signing an agreement on the reduced workweek in this 2018 file photo. / Courtesy of Woori Bank

By Park Jae-hyuk

The Woori Bank union has been giving wholehearted support to Woori Financial Group Chairman Son Tae-seung, protesting the Financial Supervisory Service's (FSS) recent decision to punish him, according to industry officials, Wednesday.

The punishment was imposed Jan. 30 for his failure to set up a proper internal control system for prevention of the derivative-linked fund (DLF) fiasco which caused major losses for investors in 2019.

As a result, Son may be barred from serving additional terms as well as banned from serving other positions in the finance sector for three to five years.

The union's support for the chairman has been considered to show its concerns about control by a former or incumbent government official over the commercial bank, in his place.

“The recent decision was the unilateral abuse of power by the FSS, and it was intended to avoid its own responsibility,” the union said in a statement issued Jan. 31.

“The FSS turned away from finding out the fundamental cause of the DLF fiasco, and it has been going all out to avoid its responsibility by slapping sanctions against banks.”

The Woori Bank union is the third-largest shareholder of the Woori Financial Group.

The unionists have wanted Son to serve another term, in recognition of his efforts leading both the group and the bank as the group chairman and the bank CEO.

Son is expected to clarify his position during a regular board meeting scheduled for Friday.

If he refuses to serve another term, Woori Financial Group will likely fall into a stalemate regarding the governance structure.

Given that there has yet to be a proper Woori Financial Group insider to substitute for Son, concerns have grown over the possible incoming of an outsider ― in particular, former or incumbent bureaucrat.

The fear has grown further, since Yoon Jong-won, former senior presidential secretary for economic affairs, was appointed the CEO of the Industrial Bank of Korea (IBK).

Considering the Korea Deposit Insurance Corp. under supervision of the Financial Services Commission is still the largest shareholder of Woori Financial Group, the government is feared to wield its influence over the appointment of the next Woori chief.

“If outsiders are mentioned as candidates for the next chairman, controversy about the government control over the commercial bank is inevitable,” a banking industry official said.

Against this backdrop, the Korean Financial Industry Union has remained reluctant to support the Woori Bank union's move.

The umbrella union has come under dilemma as the Hana Bank union supported the financial watchdog's decision to punish Hana Financial Group Vice Chairman Ham Young-joo over his responsibility for the DLF fiasco.