Financial giant Woori Financial Group said Friday that it has delayed the process to select CEO candidates for its banking unit Woori Bank.

The announcement came after the nation’s financial watchdog Financial Supervisory Service decided the day before to impose sanctions on top executives of Woori Financial Group and Hana Financial Group.

“The company has decided to readjust the schedule for shortlisting CEO candidates due to recent changes,” the financial conglomerate said in a statement. It did not give details on the exact timeline.

The financial group was initially scheduled to announce a list of CEO candidates for the commercial bank on Friday, but the plan has hit a rough patch due to the penalties.

On Thursday, the FSS decided to slap Woori Financial Chairman Sohn Tae-seung and Hana Financial Vice Chairman Ham Young-joo with “reprimands and warnings” -- one of the heaviest penalties imposed by the watchdog.

The two financial institutions are accused of having sold highly risky derivatives-linked products without properly informing customers of the risks involved.

Those who are imposed with such sanctions are barred from working in the financial sector for three to five years. They are, however, allowed to complete their current term.

Sohn has headed Woori Financial’s key business unit Woori Bank since 2017 and took the helm of the entire group in November 2018.

He was expected to serve a second term as chairman and his reappointment was set to be approved in a shareholders meeting in March.

Currently serving as the chief of a candidate selection committee for Woori Bank’s new CEO, Sohn was largely expected to end his CEO term at the banking unit in March after picking his successor.

The committee reportedly had held interviews with some of the candidates, including Kwon Kwang-seok, head of the Korea Federation of Community Credit Cooperative’s credit business, Kim Jeong-ki, head of Woori Bank’s sales support and human resources divisions, and Lee Dong-yeon, head of Woori FIS, a financial information technology solutions unit.

Market watchers expect the recent sanctions are likely to create a leadership vacuum at both Woori and Hana.

Vice Chairman Ham, who received the same reprimand, was largely expected to ascend to the chairman post in March 2021 when the term for the current chairman and CEO is scheduled to end. Ham was KEB Hana Bank CEO at the time of the alleged misselling of risky financial products.

The FSS has also decided to fine the two entities 20 billion won ($16.8 million) each and ordered the partial suspension of their business for six months.

The watchdog’s decision requires final approval by either the FSS governor or the policymaking Financial Services Commission in order to carry legal weight.

By Kim Young-won (wone0102@heraldcorp.com)