Hana Financial Group Issues Executive Personnel Changes on the Day of Financial Supervisory Service Disciplinary Notice

On December 26 last year, the Financial Supervisory Service gave prior notice of heavy sanctions on DLS to Woori and Hana Banks
On the same day, Hana Financial Group Vice Chairman Ham Young-joo was decided to be reappointed for one year
Four days later, Woori Financial's board also unanimously recommended Chairman Sohn Tae-seung for reappointment
The Disciplinary Committee is scheduled to be held on the 16th, with full efforts to reduce the sanctions on the two banks

[Asia Economy Reporter Kim Min-young] On the same day that the Financial Supervisory Service (FSS) sent preliminary notices of severe disciplinary actions to executives of KEB Hana Bank regarding the overseas interest rate-linked derivative-linked securities (DLS) scandal, Hana Financial Group reportedly decided to extend the term of Vice Chairman Ham Young-joo of Hana Financial Group (former Hana Bank CEO) by one year. This move is similar to that of Sohn Tae-seung, Chairman and CEO of Woori Financial Group, who decided on his reappointment four days after the FSS's announcement of severe disciplinary measures.

According to the financial sector on the 3rd, the FSS determined the level of disciplinary action for the DLS scandal and sent preliminary notices to Woori Bank and Hana Bank on December 26 of last year. The preliminary notices included disciplinary proposals such as reprimands and salary reductions for executives and employees. Chairman Sohn and Vice Chairman Ham were among those subject to reprimands. Although Vice Chairman Ham is not currently affiliated with the bank, consideration was given to the fact that he was the CEO of Hana Bank when the problematic DLS products were designed and sold.

Hana Financial Group decided on a one-year extension for Vice Chairman Ham on the same day it received the preliminary notice of severe disciplinary action. Since Vice Chairman Ham is an unregistered executive, the decision for reappointment can be made by management judgment without a shareholders' meeting or board resolution.

It is said that it is not too late to decide on their positions after the reprimand is confirmed through the disciplinary committee. There are speculations that Vice Chairman Ham may step down from his position if the disciplinary action is confirmed. However, there are also expectations that the level of discipline could be lowered to a warning or caution during the disciplinary committee. If Vice Chairman Ham receives a lower level of discipline, it is possible that he will continue to serve as vice chairman and may challenge for the next chairman of the holding company.

Chairman Sohn of Woori Financial Group also decided on reappointment regardless of the disciplinary outcome. Chairman Sohn, whose term ends in March, was the sole candidate recommended by the Woori Financial Group Executive Candidate Recommendation Committee on December 30, just four days after the preliminary notice of severe disciplinary action was issued. If his reappointment is confirmed at the shareholders' meeting in March, he will serve as chairman for another three years regardless of the disciplinary committee's results. However, he has decided to step down from his CEO position by December 21.

If the reprimand is confirmed by the disciplinary committee, they cannot be reappointed and cannot serve as executives at other financial companies for three years, but they can continue to serve the remaining term of their current positions. Vice Chairman Ham can continue for one year, and Chairman Sohn for three years.

Meanwhile, Woori Bank and Hana Bank are reportedly preparing for the disciplinary committee scheduled for the 16th with advice from major law firms. They are expected to make every effort to lower the level of disciplinary action based on the grounds that the CEOs did not directly instruct or involve themselves in the product design process and that they have fully accepted the compensation decision of the FSS Dispute Mediation Committee and are doing their best to compensate the victims.