[2026 National Assembly Audit] Bank Chiefs Apologize Over 'Hacking Crisis'... Also Face Rebuke: "Are You Qualified for Reappointment?" (Comprehensive)

Heads of Five Major Banks Called to National Assembly Audit
Apologize Amid Criticism of Management Responsibility, Promise Compensation
FSS: "We Will Examine CEO Accountability"
Criticized for Cutting Preferential Rates as a Workaround... "We Will Review the Details"

The heads of South Korea's five major commercial banks appeared before the National Assembly over a series of hacking incidents in the financial sector and repeatedly bowed their heads in apology. As criticism of their management responsibilities continued from both the ruling and opposition parties, the bank chiefs reiterated their promises to prevent a recurrence and compensate affected customers. Lee Chanjin, governor of the Financial Supervisory Service (FSS), also said he would examine chief executives' (CEOs') responsibility in connection with the series of cyberattacks on the financial sector. Politicians challenged the bank chiefs, whose terms are due to expire at year-end, asking whether they were qualified for reappointment.

At a National Assembly audit held by the Political Affairs Committee on the afternoon of Oct. 19, the heads of the five major banks (KB Kookmin, Shinhan, Hana, Hana, Woori, and NH Nonghyup) appeared as witnesses. It was the first time in four years, since 2022, that the heads of the five major banks had appeared together at an audit.

KB Kookmin Bank President Lee Hwanju, Shinhan Bank President Jeong Sanghyeok, Hana Bank President Lee Hoseong, Woori Bank President Jeong Jinwan, and NH NongHyup Bank President Kang Taeyoung attended a parliamentary audit of the Financial Supervisory Service and other agencies at the National Assembly on the 19th, as Financial Supervisory Service Governor Lee Chanjin walked past them. Yonhap News Agency.

Series of Financial-Sector Hacks Under Scrutiny... Bank Chiefs Apologize and Promise to Prevent Recurrence and Provide Compensation

The audit focused on the banking sector's responsibility for security failures that allowed customers' personal information to be exposed in AI-powered hacking incidents. Lawmakers from both the ruling and opposition parties criticized the banks over whether their security management systems had functioned properly across the board, from when they became aware of the data breaches to the response systems they put in place afterward. Shinhan Bank, which suffered the largest breach of customer information, and KB Kookmin Bank, which was the first to be hacked but was slow to detect and respond to the incident, resulting in further data exposure, came under particular criticism. Lawmakers from both parties also questioned the banks' commitment to spending, pointing out that although information-security budgets had increased each year, only about half of the allocated funds had been spent.

In response, KB Kookmin Bank President Lee Hwanju said, "I sincerely apologize to our customers and the public for the concern caused by this incident at a financial institution that should be built on trust." He added, "To prevent a recurrence, we will secure sufficient budget and personnel and do our utmost to establish a security system on the premise that the framework itself will be hacked using artificial intelligence (AI)." 

Shinhan Bank President Jeong Sanghyeok bowed his head and said, "I am deeply sorry," in response to People Power Party lawmaker Kim Jaeseop's comment that a very large amount of customer information had been exposed in the hacking incident. Hana Bank President Lee Hoseong also said, "I am deeply sorry for causing concern to our customers and the public over the damage from the AI hacking incident." He added, "We will allocate more budget and personnel to build our systems, prepare for AI hacking, and make even greater efforts to ensure that such damage does not recur."

The heads of Woori Bank and NH Nonghyup Bank, which had faced hacking attempts but had not suffered customer data breaches, also promised to maintain rigorous security. Woori Bank President Jeong Jinwan said, "Even though we were not hacked this time, I think we were simply lucky," adding, "We will do our utmost to maintain a system such as financial security and prevent any damage." NH Nonghyup Bank President Kang Taeyoung also stressed, "We will further upgrade the next-generation integrated control system that we established in 2022, both this year and next year, as part of our security measures, and leave nothing to chance."

Woori Bank President Jung Jinwan answers questions from members of the National Assembly’s Political Affairs Committee during a parliamentary audit of the Financial Supervisory Service and other agencies at the National Assembly on the 19th. From the right in the back row are KB Kookmin Bank President Lee Hwanju, Jung, Shinhan Bank President Jeong Sanghyeok, Hana Bank President Lee Hoseong, and NH NongHyup Bank President Kang Taeyoung. At the front left is Financial Supervisory Service Governor Lee Chanjin. Yonhap News.

Compensation for customers affected by the exposure of their personal information was also a key issue at the audit. Lawmakers from both parties took issue with the banks' promises to provide compensation only "if secondary damage occurs," despite the fact that the banks had already exposed customer information. Critics said that older customers and other financially vulnerable groups may find it difficult to learn that their information has been exposed, and that it is also difficult for customers to prove that the exposure caused them harm. They questioned whether the banks were effectively trying to avoid their responsibility to compensate customers. Han Changmin, a lawmaker from the Social Democratic Party, criticized the promise of full compensation if secondary damage occurred as "a play on words."

In response, President Jeong said, "Regardless of whether customers were at fault, we plan to provide full compensation to approximately 25,000 people." President Lee Hwanju also said, "We have already notified customers that we will provide full compensation if damage occurs. We will actively review the scope and level of compensation." President Lee Hoseong said, "We have already begun providing compensation by waiving fees as an initial measure. Second, we are contacting customers directly to enroll them in financial security insurance and compensate them for any additional damage." He stressed, "Regardless of that, we will of course bear 100% of the responsibility for compensating customers if they suffer damage."

Regarding the series of hacking incidents in the financial sector, FSS Governor Lee Chanjin said, "I believe this will be the first cyber security incident in which the question of a CEO's responsibility is addressed in relation to the duty to manage internal control standards." His remarks were interpreted to mean that the FSS would examine CEOs' responsibility for managing internal controls as it reviews the response to the hacking incidents and the exposure of personal information.

Hacking Accountability Debate Extends to Reappointment... "Internal-Control Capabilities Should Be a Key Evaluation Criterion"

As the terms of the heads of the five major banks are all due to expire at year-end, lawmakers from both the ruling and opposition parties said that information security and internal-control capabilities should be key criteria when selecting or reappointing CEOs.

One lawmaker asked President Jeong whether he intended to seek reappointment, saying, "I believe that a bank chief who cannot even protect customer information properly and has failed to meet their responsibility for managing internal controls is not qualified to discuss reappointment." President Jeong replied, "I have not considered reappointment at this point. I am currently focused on helping victims and preventing a recurrence."

Lawmakers also raised concerns about the structure that gives financial holding company chairmen decisive influence over the appointment and reappointment of bank presidents. Democratic Party lawmaker Lee Kang-il said, "People in the market believe that the financial holding company chairman's wishes are the most important factor in appointing a bank president." He stressed, "The board should make appointment decisions based on a comprehensive assessment of capabilities, such as performance and internal controls, rather than the chairman's influence." In response, FSS Governor Lee said, "Even before the law is amended, we will review the overall appointment procedures currently used in the banking sector and check whether improvements to corporate governance are leading to tangible results."

Commercial bank chiefs, including KB Kookmin Bank President Lee Hwanju (left), clasp their hands as they return to their seats after being unable to answer questions from People Power Party lawmaker Park Sunghoon during a parliamentary audit of the Financial Supervisory Service and other institutions by the National Assembly’s Political Affairs Committee on the 19th. From left: NH NongHyup Bank President Kang Taeyoung, Hana Bank President Lee Hoseong, Woori Bank President Jung Jinwan, Shinhan Bank President Jung Sanghyuk, and KB Kookmin Bank President Lee Hwanju. Yonhap News

Criticism of Banks' Response to Legal Amendment on Lowering Add-On Interest Rates: "They Cut Preferential Rates"... "We Will Review the Details"

At the audit, lawmakers also alleged that banks were increasing their interest income by reducing preferential interest rates, despite a law being amended last July to prevent them from passing the burden of interest onto customers.

Democratic Party lawmaker Min Byeongdeok criticized the banks, saying, "By lowering add-on rates while cutting preferential rates, they have used a trick that has actually increased the share going to the banks. This goes against and undermines the intent of the amendment to the Banking Act." According to Min, KB Kookmin Bank lowered its add-on rate from 3.42 percentage points in June to 3.34 percentage points in August, while also reducing its preferential rate from 1.96 percentage points to 1.65 percentage points. Over the same period, NH Nonghyup Bank lowered its add-on rate from 3.60 percentage points to 3.34 percentage points, while reducing its preferential rate from 2.19 percentage points to 1.58 percentage points.

Political Affairs Committee Chair Yoo Dongsoo also raised the issue, criticizing the banks by asking, "Does this mean you intend to bleed the public dry?" People Power Party lawmaker Park Juntae also said, "The way add-on and preferential rates are calculated should be adjusted to reduce the interest burden on people who need loans."

In response, President Lee Hwanju and President Kang said, "We fully understand the concerns about add-on rates," and added, "We will look into the specific items that led to the reductions in preferential rates."

This content was produced with the assistance of AI translation services.