DLF Sanctions, Management Restructuring... Busy End of Month for Woori Financial Group

3rd 'DLF Sanction Review' on the 30th... Conclusion Possible That Day
Final Candidate for Next Woori Bank President to Be Selected on the 31st

[Asia Economy Reporter Kim Hyo-jin] Woori Financial Group is facing a critical turning point related to its management structure at the end of this month. While the level of sanctions for Woori Financial Chairman and Woori Bank CEO Sohn Tae-seung regarding the 'Derivative Linked Fund (DLF) sanctions' is likely to be decided, the final candidate for the new CEO of Woori Bank, the core of the group, will be selected. The DLF sanctions could affect Chairman Sohn's reappointment, and the appointment of the new Woori Bank CEO is noteworthy as it will bring fundamental changes to the group's management structure.

According to the financial sector on the 28th, the Financial Supervisory Service (FSS) will hold the third disciplinary review committee on the 30th regarding the DLF loss incident. The level of sanctions against Chairman Sohn could be determined as early as this disciplinary review.

Since the FSS preliminarily notified Chairman Sohn last month of the possibility of a 'written warning,' which is a severe disciplinary action, Woori Financial has made every effort to lower the level of sanctions through arguments and explanations in the past two disciplinary reviews. If the written warning is confirmed, Chairman Sohn can complete his remaining term but will be restricted from employment in the financial sector for 3 to 5 years thereafter.

The Woori Financial Executive Candidate Recommendation Committee recommended Chairman Sohn last month as the next chairman candidate for a three-year term. The reappointment will be decided at the shareholders' meeting in March, but if the written warning is confirmed before then, a prolonged dispute through administrative litigation may ensue, potentially disrupting the execution of the next chairman's duties depending on the outcome.

The FSS is pressuring Chairman Sohn based on the Financial Company Governance Act, which stipulates that 'financial companies must establish internal control standards.' Chairman Sohn's side is known to have refuted the grounds for such sanctions during the disciplinary review and appealed against the unfairness of bearing almost full responsibility as chairman or CEO.

On the following day, the 31st, the group's nomination committee will finalize and recommend the final candidate for the new Woori Bank CEO. This marks crossing the crucial milestone toward ending the 'group chairman + Woori Bank CEO dual role system.' The nomination committee consists of five outside directors, including Chairman Sohn as the chairman, No Seong-tae, Park Sang-yong, Jeong Chan-hyung, Jeon Ji-pyeong, and Jang Dong-woo.

The nomination committee decided last month to separate the roles of group chairman and Woori Bank CEO. This decision implies that Chairman Sohn takes proactive responsibility regardless of the DLF sanctions to minimize management uncertainty.

Earlier, on the 22nd, the nomination committee shortlisted a total of seven candidates for the 'long list.' These include Jung Won-jae, President of Woori Card; Jo Un-haeng, President of Woori Comprehensive Financial; Jung Chae-bong, Head of Woori Bank's Sales Division; Lee Dong-yeon, President of Woori FIS; Kim Jeong-gi, Head of Woori Bank's Sales Support Division; Kwon Kwang-seok, CEO of Saemaeul Geumgo Central Credit Guarantee; and Lee Dong-bin, President of Suhyup Bank.

Inside and outside Woori Financial, the recommendation of an internal candidate is strongly discussed. This is because there is a need to reorganize the organization unsettled by the DLF incident, respond to the financial authorities' strengthened consumer protection policies, and smoothly coordinate with Chairman Sohn. Since Woori Financial has set 'restoring customer trust' as its management policy this year, there is a possibility that emphasis will be placed on enhancing operational stability and strengthening internal capabilities.