Woori set to vindicate CEO over Lime fiasco
From left are Woori Financial Group Chairman Son Tae-seung and Shinhan Bank CEO Jin Ok-dong. Courtesy of each firm
By Lee Min-hyung
Woori Financial Group plans to make group-wide efforts to mitigate tough sanctions slapped on its Chairman Son Tae-seung over its involvement in a nationwide fund mis-selling fiasco last year.
The Financial Supervisory Service (FSS) recently reprimanded the Woori chief for his poor supervision of fund sales linked to Lime Asset Management. The financial regulator originally intended to suspend Son from duty, which would have been a harsher punishment; but the reprimand is still considered quite substantial in the industry.
Woori is set to keep trying to prove that the group's involvement in the mis-selling of fund products was not intentional until the Financial Services Commission (FSC) makes its final decision on the punishment. Mis-selling in the financial sector refers to the sale of an investment product to customers without explaining the full range of potential risks.
“Woori Bank, as a seller of the troubled Lime funds, could not recognize any risk factors over the products in advance, and we are going to actively prove this to the FSC,” an official from the lender said Friday.
The lender also said the punitive measure would not affect Son serving his chairmanship until his tenure ends.
The FSS also plans to resume its sanctions committee meetings on Shinhan Bank and Shinhan Financial Group on April 22 over a similar issue over their mis-selling of Lime funds. The FSS also warned that Shinhan Bank CEO Jin Ok-dong would face a heavy punishment for his allegedly inept supervision of the fund products.
Woori sold 357.7 billion won ($320 million) worth of the funds, while Shinhan's Lime fund sales reached 276.9 billion won.
The regulator's sanctions committee met twice over the past two months. Following the decision on the Woori chief, the FSS is set to announce the level of punishment for Jin as well as Shinhan Financial Group Chairman Cho Yong-byoung.
The FSS already sent an advance notice to Jin that he will be reprimanded for his responsibility in the lender's involvement in the fund fiasco. As the reprimand is also classified as a tough punishment, the bank is also expected to do its utmost to mitigate the disciplinary measure on Jin.
The tough sanctions, if confirmed by the Financial Services Commission, will block the officials from working at any other financial institution here for at least three years after they finish their present terms.
As Jin is considered one of the candidates for the next chairman of Shinhan Financial Group, the punitive measure may end up escalating uncertainties over the group's governance structure after the term of the incumbent chairman ends. Cho also received a warning from the FSS for poor supervision of the funds sold by the group's two affiliates ― Shinhan Bank and Shinhan Investment.