이 기사는 2022년 05월 12일 07:41 더벨 유료페이지에 표출된 기사입니다.

South Korea’s financial watchdog Financial Supervisory Service (FSS) imposed a fine and sanctions against the country’s DGB Financial Group for neglecting its duties to check qualifications of outside directors and to report business reports.

The FSS notified DGB Financial on April 29 of its decision to impose sanctions on the company alongside matters requiring caution and improvements, according to industry sources. It also notified Daegu Bank of matters requiring caution and improvements.

The decision came after the watchdog conducted the management status evaluation on June 21, 2021 on DGB Financial and Daegu Bank. The FSS dispatched 20-30 personnel to the headquarters in Daegu to carry out on-site inspections for over a month.

After the inspection, the FSS imposed a fine of 152 million won ($119,000) on the basis of the Financial Holding Companies Act to DGB Financial for violating the duties to check the qualifications for outside directors and report the business report. The FSS issued a caution to three executives and employees who were responsible for the work. There are five levels of FSS sanctions against executives of financial institutions: suggestion of dismissal from office, whole or partial suspension of business duty, disciplinary warning, warning and caution.

The watchdog also pointed out that there is no financial consumer protection expert among candidates for DGB Financial’s outside director and that the qualification verification process for outside directors needs to be improved.

DGB Financial was also required to improve its risk management procedure for joint investment with subsidiaries, prior consultation and reporting procedures and liquidity risk management for subsidiaries.

Daegu Bank had a wider range of problems, including insufficient number of outside directors and absence of financial consumer protection experts on the board of directors.

The financial watchdog pointed out that the lender needs to strengthen the operation and management of the information processing system supervision measures, enhance the management system for lending examination procedures, strengthen the post management of insolvent and amortized bonds, strengthen the function and operation of the early warning system and improve the effectiveness of the early warning system for liquidity risks.

Daegu Bank is currently on trial for a real estate fraud incident at its Cambodian entity. The FSS pointed out the inadequate key personnel management system at its overseas entities.

The watchdog ordered the lender to improve internal control of overseas entities, but has yet to impose sanctions as the litigation is still ongoing. The FSS plans to decide the possible sanctions on the lender and employees after the case is closed. (Reporting by Hyun-jung Kim)