KB Financial head faces discipline for investment losses

SEOUL, Sept. 4 (Yonhap) -- South Korea's financial watchdog said Friday it has
decided to impose "stern discipline" on the chairman of KB Financial Group Inc.
for inflicting investment losses on a state-owned bank.
Hwang Young-key is responsible for Woori Bank's 1.62 trillion won (US$1.3
billion) worth of losses from investments in derivative products between
2005-2007, the Financial Supervisory Service (FSS) said. Hwang headed Woori Bank
and its parent Woori Finance Holdings Inc. from 2004 to 2007.
The FSS decision to relieve Hang from his post, which was made late Thursday, is
subject to final approval by the Financial Services Commission, the watchdog's
decision-making body.
Even if the reprimand is finalized, Hwang will be able to retain his current
position by South Korean law. But Hwang will be barred from serving a second term
as KB Financial's chief and holding executive posts at all domestic financial
firms for four years.
Hwang was named CEO of KB Financial, South Korea's third-largest financial
services company, in September last year when the holding company was
established.
Sources, meanwhile, said the watchdog is considering prohibiting Woori Bank from
trading financial derivatives for a certain period, holding the lender
accountable for its past losses.
According to the FSS, Woori Bank incurred the loss by investing in overseas
credit default swaps, which protect investors against the risk of default, and
other derivatives.
In the wake of the country's financial crisis in 1997, the government injected
more than 12 trillion won into Woori Bank to turn it around.
pbr@yna.co.kr
(END)