Watchdog to discipline financier for failed investment

SEOUL, Aug. 17 (Yonhap) -- South Korea's financial watchdog said Monday it is
pushing to reprimand a leading financial chief for inflicting huge losses on a
state bank by spearheading the lender's failed overseas investments.

Hwang Young-key, head of KB Financial Group Inc., is deemed accountable for
investing in "improper" financial products while serving as president of the
state-owned Woori Finance Holdings Co. and its flagship Woori Bank from
2004-2007, the Financial Supervisory Service (FSS) said.
During his tenure, Woori Bank invested US$1.58 billion in overseas credit default
swaps, which protect investors against the risk of default, and other
derivatives. The state lender has booked 90 percent of the investment as losses.
"Given Hwang's responsibility for the loss-incurring investment, the FSS
temporarily decided to relieve him of his current post," an official said. "The
watchdog informed KB Financial Group of the decision."
The FSS plans to call a hearing on the case early next month, with Hwang and
representatives from the financial group attending. After that, the Financial
Services Commission (FSC), the decision-making body of the FSS, will make a final
judgment, the watchdog said.
Even if the FSC decides to discipline Hwang, he will be able to retain his post
by local financial law. He took the helm at KB Financial Group about a week
before the company set sail in September last year.
KB Financial Group, South Korea's third-largest financial services company that
owns the nation's top lender, Kookmin Bank, refused to comment.
In the wake of the country's financial crisis in 1997, the government injected
more than 12 trillion won ($9.5 billion) into Woori Bank to turn it around.
yskwak@yna.co.kr
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