November 24, 2024

• 

Woori Bank CEO Cho Byung-kyu attends a Financial Supervisory Service meeting with local banking chiefs held in Seoul on Sept. 10. (Newsis)

Woori Bank CEO Cho Byung-kyu is stepping down in disgrace as legal risks surrounding the bank and its parent group intensify.

According to industry sources on Sunday, the board of Woori Financial Group, the holding company of Woori Bank, on Friday decided against reappointing Cho following the expiration of his current term at the end of this year.

The decision came hours after local prosecutors filed an arrest warrant for former Woori Financial Chairman Son Tae-seung on charges of breach of trust related to alleged improper loans issued to Son's family members by Woori Bank.

Earlier in the week, prosecutors raided Woori Bank's headquarters in central Seoul, seizing documents and searching the offices of the bank's CEO and the financial group’s chairman.

The investigation followed findings by financial regulators that Woori Bank had illegally extended approximately 35 billion won ($24.9 million) in loans to Son’s family members and affiliated businesses between April 2020 and January this year. Prosecutors later uncovered an additional 7 billion won or more in questionable loans.

Cho, who assumed office in July 2023, had been a strong candidate for reappointment, credited with driving record-setting performances. Under his leadership, the bank posted a record half-year net profit of 1.67 trillion won in the first half of 2024 and 851 billion won in the third quarter, bringing this year’s cumulative profit beyond last year’s annual net profit of 2.52 trillion won.

However, the scandal overshadowed his accomplishments as accusations surfaced that he failed to immediately report the irregular loans to authorities despite being aware of them. Facing investigation as a suspect, Cho’s potential reappointment became untenable, prompting the board to exclude him from consideration.

Financial regulations mandate that CEO nominees be announced at least one month before the incumbent’s term ends, meaning the nominee list is expected to be revealed in the coming week. Reports indicate that the board may bypass a shortlist and directly name the final nominee, with potential candidates including the bank's vice presidents and leaders from other Woori subsidiaries.

Meanwhile, the Seoul Southern District Court is scheduled to decide on Tuesday whether to approve Son’s arrest warrant, with a hearing set for that afternoon. Son has reportedly denied all allegations during previous questioning.

Alongside Cho, the CEOs of the nation’s five major commercial lenders are nearing the ends of their terms. Among them, NongHyup Bank, which recorded the most financial irregularities among the top five banks this year, is grappling with leadership challenges, with speculation pointing to a CEO replacement. In contrast, the CEOs of Shinhan Bank, KB Kookmin Bank and Hana Bank are expected to be reappointed.

By Choi Ji-won (jwc@heraldcorp.com)