Financial Supervisory Service Announces Inspection of Woori Savings Bank and Capital
Woori Financial: "We Will Humbly Accept the Results"
Chairman Lim Jong-ryong to Attend National Assembly Audit on the 10th... Attention on Explanation and Clarification
Ahead of the National Assembly's Political Affairs Committee audit scheduled for the 10th, allegations of improper loans related to the former chairman's relatives at Woori Financial Group appear to be spreading to its affiliates. As a result of an unscheduled inspection conducted by the Financial Supervisory Service (FSS) on Woori Financial Group affiliates, improper loans totaling 1.4 billion KRW were identified at two of its affiliates.
According to the FSS on the 7th, Woori Financial Savings Bank and Woori Financial Capital were confirmed to have executed improper loans amounting to 1.4 billion KRW to companies related to former chairman Sohn Tae-seung's relatives. Woori Financial Savings Bank issued a 700 million KRW unsecured loan on January 31 to a corporation where the spouse of the former chairman’s brother-in-law served as CEO. During the loan process, evidence was found that employees formerly from Woori Bank were involved, and part of the loan funds were confirmed to have been misappropriated for personal use.
In the case of Woori Financial Capital, on October 21, 2022, it handled a 700 million KRW real estate secured loan to another corporation where the former chairman’s father-in-law was CEO. It was also revealed that part of the loan funds was used for personal purposes. Moreover, despite the deterioration of the corporation’s credit rating and a decline in collateral market value during the maturity extension process last October, the extension was approved without any bond preservation measures.
The FSS believes that this incident expanded to affiliates because Woori Bank and its management recognized the improper loans related to the former chairman’s relatives but failed to take immediate action. In particular, outdated organizational culture, lax ethical awareness within the financial holding company, and the failure of internal controls at the holding company level were identified as factors that hindered the prevention and early detection of the financial accident.
The FSS has reported the illegal suspicions, including the misappropriation of loan funds by borrowers and related parties, to investigative authorities and has demanded strict internal disciplinary measures against employees of Woori Financial Savings Bank and Woori Financial Capital involved in the improper loan handling and maturity extension.
An FSS official stated, "We will closely examine issues such as organizational culture and ethical awareness at the financial holding company level and guide and supervise to promptly improve and strengthen any deficiencies."
Additionally, Lim Jong-ryong, chairman of Woori Financial Group, has decided to attend the National Assembly Political Affairs Committee audit on the 10th regarding this improper loan incident involving the former chairman’s relatives. During the audit, there is expected to be focused questioning on why the internal audit at Woori Bank, despite recognizing the improper loans, did not promptly report the matter to financial authorities. Attention is focused on what explanations and clarifications Chairman Lim will provide and whether additional facts will be confirmed.
A Woori Financial Group official stated, "We are aware of the FSS’s unscheduled inspection results targeting our affiliates and will humbly accept them."
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