2 weeks Ago By [email protected](KoreaTimes)
Financial Supervisory Service (FSS) Governor Lee Bok-hyun speaks during an audit at the National Assembly National Policy Committee in Yeouido, Seoul, Oct. 17. Yonhap By Lee Kyung-min KB and Woori financial groups will face intense scrutiny from the Financial Supervisory Service (FSS), as indicated by Governor Lee Bok-hyun characterizing the former’s Indonesia business as a “reputation risk factor” and the latter’s culture as “cronyism-insulated leadership,” Wednesday.
Hanging in the balance will be the business expansion plans of two leading financial groups. Chief among concerns for KB is reduced offshore investment opportunities, hamstrung by years of losses to the tune of trillions of won at Bank KB Bukopin, its banking entity in Indonesia. The financially troubled lender remains plagued by two dozen penalties due to management failures there.
Also in jeopardy are Woori’s long-awaited acquisitions of Tongyang Life and ABL Life, critical to bolstering its non-banking businesses. Read More Financial watchdog puts brakes on Woori’s acquisition of Tongyang Life, ABL Life Anbang liquidation to help smooth sailing of Woori's Tongyang, ABL acquisitions “I expect the FSS regular inspections to produce measures to address and resolve issues of irregularities brought to the fore during the recent National Assembly audit,” Lee said during a meeting of high-ranking FSS officials, Tuesday. The comment followed repeated criticisms of KB’s overall management abroad including IT services and its small partners in call centers.
Main opposition Democratic Party of Korea Rep. Jo Seoung-lae, a member of the National Assembly National Policy Committee, said Bank KB Bukopin’s losses exceeded 1.5 trillion won as of end-June, despite a 3.
1 trillion won investment, or about 8 percent of KB Kookmin Bank’s equity capital. Further dragging down the Indonesia business, the lawmaker said, was 14 billion won in settlement failures involving five of KB’s small partners in the next-generation banking system (NGBS) project. The digital drive was launched to help normalize the troubled entity at the time of acquisition in 2018, but has since disintegrated.
The Bukopin bank received 28 penalties due to poor operations. As for Woori, the apparent failures in internal control call into question the group’s overall capability to expand in the context of risk management, Lee said. Central to the criticisms are the group’s casual and irresponsible attitude toward repeated approvals of poorly granted loans, employee embezzlement and favorable treatment of the group’s top executives and their close circle of trusted employees.
Woori Bank extended 35 billion won in improperly granted loans to relatives of former Woori Financial Group Chairman Son Tae-seung. Several bank employees have also embezzled a combined total of tens of billions of won over the past few years. Prosecutors searched Son's home and a former high-level Woori Bank official was indicted and detained.
Prosecutors say the official expedited the loan approval process for Son's relative. He faces charges of bribery. Woori Financial Group Chairman Yim Jong-yong said Oct.
11 that he would no longer intervene in the appointment and reshuffling of 192 executives at the group and its subsidiaries. The effort to eradicate the concerns over influence-peddling will reduce the outsized power and role of the group chair, helping eliminate questionable loan practices, he added..
