South Korea's financial watchdog Wednesday punished the head of the country's largest financial group for allegedly causing huge investment losses at a state-owned bank which he previously ran.
The Financial Services Commission suspended Hwang Young-Key from duty for three months. It blamed him for losses of 1.62 trillion won (1.3 billion dollars) which Woori Bank sustained on its investments in derivatives between 2005 and 2007. The investments went sour during the global financial crisis.
Hwang will retain his current post as CEO of KB Financial but will not be able to extend his term, which ends in about two years. He is also barred from holding a top post at any domestic financial firm for four years.
The watchdog said Woori Bank incurred its losses by investing in overseas credit default swaps, which protect investors against the risk of default, and other derivatives. Woori posted its first loss in almost seven years in the fourth quarter of last year.
The government holds a 73 percent stake in Woori after rescuing it in the aftermath of the 1997-1998 East Asian financial crisis. Hwang, 57, has been quoted as saying that last year's crisis was the equivalent of a "natural disaster" and that he should not be accountable for losses caused by it. He became chief of KB Financial, the country's largest financial group in terms of assets, in September last year.
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