Lee Bok-hyun "KB and Woori Financial Need Thorough Review of Operational Risk and Soundness"

29th Financial Supervisory Service Executive Meeting
National Assembly Audit Points on Overseas Subsidiary Investments and Financial Accidents
Also Orders Management of Real Estate PF Cleanup Target Sites

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), emphasized on the 29th the need for thorough inspection in terms of operational risk and soundness regarding the issues raised about KB Kookmin Bank and Woori Financial Group during the National Assembly audit.

At the FSS executive meeting that day, Governor Lee requested, "Please conduct a meticulous review during regular inspections of financial accidents involving banks pointed out in the recent National Assembly audit, as well as investment and operational failures of overseas local subsidiaries, and prepare measures to enable fundamental improvements." He added, "The repeated criticisms related to KB Financial require examining whether there is complacency in managing operational risks, as this could expand reputational risk. Regarding Woori Financial Group, it is necessary to closely inspect whether the internal control and soundness management levels can handle the potential risks that may arise from the current management’s focus on external growth."

He also mentioned the increasing possibility of sudden risks toward the end of the year amid rising interest rates and exchange rates despite the base rate cuts. He warned, "With the U.S. presidential election, geopolitical risks, and uncertainties in major countries’ monetary policies combined, volatility in stock prices, interest rates, and exchange rates may exceed expectations, potentially causing large losses or liquidity shocks."

Particularly concerned about the potential deterioration of real estate project financing (PF), he said, "We are gradually advancing tasks such as first and second phase feasibility evaluations, liquidation, and restructuring, but uncertainties remain high due to the sluggish construction market." He urged, "For projects subject to liquidation, please promptly proceed with light auctions and write-offs, while actively managing smooth funding supply through syndicated loans from the financial sector for normal and restructured projects capable of housing supply."

He also pointed out the ongoing trend of decreasing bank branches and ATM machines due to recent financial digitalization. He requested, "Set improving financial accessibility for the elderly and disabled as a key financial supervisory agenda and manage it actively." He instructed to guide the faithful implementation of the bank branch closure rationalization plan announced in April and to encourage the exploration and activation of various alternative measures to alleviate consumer inconvenience, such as joint branches among banks, joint ATMs, and mobile branches.