Lee Jang-ho
Financial authorities recently urged Busan-based BS Financial Group chief executive Lee Jang-ho to step down from his post voluntarily before his term expires in March 2014, according to market insiders on Wednesday.
The alleged pressure on the provincial financial firm from regulators has come under spotlight after most chairmen of the nation’s major financial groups were replaced over the past few months.
The Financial Supervisory Service, in a statement earlier in the day, said that BS Financial conducted some personnel activities without permission from the Financial Services Commission, the decision-maker of the FSS.
The regulator particularly highlighted that CEO Lee has concurrently held the posts of the chief of the group’s risk management committee and the chief of the group’s philanthropic activity unit.
It said BS Financial breached the rules on obligation of prior notification of its concurrent jobs to the FSC four times between January and April 2012.
“There is a possibility that the group’s risk management policy will be swayed by the CEO and exploit the philanthropic unit to PR activities of the financial group,” said the FSS.
The FSS ordered the group to reprimand executives engaged in the “personnel misdeed,” as an apparent pressure on the CEO to be held accountable.
The regulator also pointed that 10 employees of the group’s flagship Busan Bank had unauthorized access to 69 customers’ personal information 372 times from April 2010 to June 2012.
Busan Bank also operated 92 irregular accounts under borrowed names of 28 individuals in 2009, it added.
CEO Lee clarified that there was little reason for him quit shortly, adding that there has been no direct pressure from the authorities.
Further, Lee expressed his willingness to take the initiative in winning the coming bidding for Kyongnam Bank, a unit of Woori Financial Group.
The state-invested Woori Financial has faced privatization that may involve separate sale of its provincial units: South Gyeongsang Province-based Kyongnam Bank and South Jeolla Province-based Kwangju Bank.
The alleged intervention of regulators comes amid the situation that BS Financial is set to vie with Daegu-based DGB Financial Group for Kyongnam Bank.
Some market insiders predict that Lee will eventually resign irrespective of his remaining term. “There is a feasibility that he will step down right after the preferred bidder for Kyongnam Bank is decided.”
Among the leaders in the financial sector who quit before their terms’ expiry under the Park Geun-hye administration were Kim Seung-yu of Hana Financial Group, Kang Man-soo of the state-controlled KDB Financial, Lee Pal-seung of Woori Financial, Jun Kwang-woo of the National Pension Fund and Kim Bong-soo of the Korea Exchange.
KB Financial Group chairman Euh Yoon-dae has clarified that he will not seek a second term after July 12, when his three-year tenure ends.
By Kim Yon-se
(kys@heraldcorp.com)