DLF Scandal First Disciplinary Hearing Ends Without Conclusion... Will Chairman Sohn Tae-seung Attend the Second?

On the 16th, when the Financial Supervisory Service's Disciplinary Committee regarding the overseas interest rate-linked derivative-linked fund (DLF) incident, which caused large-scale principal losses, was held, members of the DLF Victims Countermeasure Committee and the Financial Justice Solidarity held a press conference in front of the Financial Supervisory Service in Yeouido, Seoul, demanding severe disciplinary actions against Woori Bank and Hana Bank. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Jo Gang-wook] The Financial Supervisory Service's (FSS) first disciplinary committee meeting regarding the overseas interest rate-linked derivative-linked fund (DLF) scandal, which caused massive principal losses, was held on the 16th but failed to reach a conclusion. The next disciplinary meeting is scheduled for the 22nd. Furthermore, there is a high possibility that the third disciplinary meeting will be held on the originally planned date of the 30th.

According to the FSS and banking sector on the 18th, the first disciplinary meeting held on the 16th started at 10 a.m. and ended around 9 p.m.

The review of KEB Hana Bank continued until 7 p.m., followed by the review of Woori Bank, which lasted only about two hours and ended without a conclusion.

At the disciplinary meeting that day, Sohn Tae-seung, chairman of Woori Financial Group, and Ham Young-joo, vice chairman of Hana Financial Group, attended in person and made their defense statements.

Since the first disciplinary meeting mainly focused on the review of Hana Bank, the second disciplinary meeting is expected to focus on Woori Bank. It is also of interest whether Chairman Sohn, who attended the first meeting, will appear again.

The Woori Bank disciplinary meeting was scheduled to start around 4 p.m., but as the review of Hana Bank was prolonged, Chairman Sohn, who arrived at the FSS's 11th-floor main conference room around 2:30 p.m., had to wait for more than four and a half hours.

Including the two-hour review, he had to stay inside the FSS for a total of six and a half hours. With the chairman of the holding company and bank president tied up in the disciplinary meeting, concerns have been raised that handling important management issues will inevitably face setbacks.

In particular, Woori Financial's absence from the preliminary bidding for the sale of Prudential Life, which took place on the same day as the first disciplinary meeting, is believed to be due to a lack of capacity caused by a series of financial accident responses, including the DLF scandal and the suspension of redemptions for Lime Asset Management's funds due to incomplete sales. Given the situation where the position of the head is at risk depending on the level of disciplinary action, it seems they were conscious of critical views that they are focusing solely on business expansion rather than dedicating themselves to consumer damage response.

There is also a possibility that the third disciplinary meeting will be held on the 30th. The second disciplinary meeting was originally scheduled for the 30th, two weeks later. However, to speed up discussions, the schedule was moved forward, but since the first disciplinary meeting took longer than expected, it is highly likely that no conclusion will be reached in the second meeting either.

A financial sector official said, "Since the cause is serious, it is unlikely to end with just one or two disciplinary meetings," adding, "Especially since sanctions involve not only the CEO but also financial institutions, the final approval of the Financial Services Commission is required, so even if the level of discipline is decided, it may take considerable time before it actually takes effect."