Woori Financial Group Chief Executive and Chairman Yim Jong-yong should keep his post through his term and lead the banking group’s efforts to improve its corporate governance and risk management, South Korea’s top financial watchdog said.
In a meeting of the government-local bank presidents on Wednesday, Lee Bok-hyun, governor of the Financial Supervisory Service (FSS), also said the regulator will thoroughly look into any wrongdoings by Woori and other banks and take action if necessary.
“He (Yim) should be responsible for resolving recent issues at Woori, including improper loan scandals, under his leadership,” Lee told reporters after the meeting.
“The reality is that factions exist within Woori Bank and internal controls have weakened. Chairman Yim’s sudden retirement could create significant governance issues. He should take responsibility for addressing the current situation at Woori. I believe it would be best for him to complete his term,” he added.
Woori is under tight government scrutiny following last year’s illegal loans involving relatives of former Woori Financial Chairman Sohn Tae-seung.
In August 2024, the FSS found that Woori affiliates had improperly lent 35 billion won ($25.6 million) to former Chairman Sohn’s relatives. The case is under investigation.
UNDER PRESSURE
The incumbent Chairman and CEO Yim has come under growing pressure to resign, taking responsibility over the case and a series of other unlawful loans.
Yim, who took the helm of Woori, the country’s fourth-largest financial services provider, in March 2023, is slated to end his three-year term next year.
At Wednesday’s meeting of bank chiefs, the FSS governor called on them to enhance their internal control system and risk management to prevent the recurrence of illegal lending and other finance-related wrongdoings.
“Woori should solve its problems under a clear governance system. If there’s any governance issue at Woori, we’ll strictly handle that in line with principles,” said Lee.
The FSS chief said Yim and heads of other banks must stake their posts on solving financial irregularities at their banks and achieving structural reforms.
BOK NEEDS TO MAINTAIN EASING MONETARY POLICY: LEE
Lee said there’s a consensus among government officials, including those in the finance ministry, that the Bank of Korea (BOK) should maintain an easing monetary stance to help buttress the government’s economic boosting measures.
Regarding market concerns that commercial banks have not reflected recent BOK policy rate cuts in their lending interest rates for higher loan margins, he said, “I expect the central bank’s monetary easing stance, which started last October, to be felt in the market from the first quarter of this year.”
“When the BOK makes its next rate decision, it should consider inflation, GDP and foreign exchange. We, the government, share the view that the central bank’s accommodative monetary policy needs to be maintained for some more time,” he said.
He said the FSS, together with the Financial Services Commission, the country’s financial regulator, will announce measures related to the sale of high-risk financial products such as ELS, or equity-linked securities, around the end of this month.
By In-Soo Nam
isnam@hankyung.com
Jennifer Nicholson-Breen edited this article.
