|The Financial Services Commission in the Government Complex Seoul / Korea Times file|
By Park Jae-hyuk
The Financial Services Commission (FSC) has initiated a move to reduce the penalties imposed on Woori and Hana banks over the "DLF fiasco," indicating its disagreement with the Financial Supervisory Service's (FSS) decision to punish both banks and their top executives heavily.
According to the FSC, Thursday, the Securities and Futures Commission (SFC) under the supervision of the FSC decided a day earlier that the fines for Woori and Hana should be 19 billion won ($16 million) and 16 billion won, respectively ― far lower than the 23 billion won and 26 billion won the FSS had proposed the previous month.
The SFC reportedly took account of the two banks' efforts to compensate for victims for the losses they suffered after the banks mis-sold them the investment options referred to as derivative-linked funds (DLFs).
Observers expect the FSC differing with the FSS over the banks will affect Woori Financial Group Chairman Son Tae-seung's desire to serve another term.
The FSS is a public agency that inspects and supervises financial services firms under the oversight of the FSC, the government regulatory authority.
Although the sanctions against the bank chiefs were officially finalized following approval by FSS Governor Yoon Suk-heun, the Woori Financial Group board that wants Son to serve another term ― something the punishment would have prevented ― has been preparing for administrative litigation against the FSS.
If a court considers the FSS punishment unreasonable ― depending on the FSC's decision ― and dismisses the sanction against Son, he will be able to continue leading Woori.
The FSC will finalize the SFC's decision during a forthcoming general meeting slated for Feb. 19.
According to sources, FSC Chairman Eun Sung-soo is not against Woori taking legal action against the FSS.
"The FSC chairman served as the Export-Import Bank of Korea CEO and thinks financial companies have the right to file administrative litigation against regulators," a top FSC official told The Korea Times.
If the FSC agrees to the lower penalties, this will weigh heavily on the FSS.
The FSC is expected to finish its review of the DLF sanctions by early March so as not to influence the general shareholders meeting of Woori Financial Group scheduled for March 24.
The sanctions against the bank executives will take effect when the FSC finishes the review.
Meanwhile, the FSC denied speculation that the SFC decision was a warning to the FSS that it was punishing financial companies unreasonably.
"The SFC made its decisions based on in-depth debates on the facts and related laws, and according to its own principles," the FSC said in an official statement.