The Financial Supervisory Service, the nation’s financial watchdog, is likely to punish the top posts of KB Financial Group and Kookmin Bank, both of whom are responsible for the recent leadership vacuum at the county’s largest banking group.

“Based on the results of an investigation, which will be completed this week, disciplinary action will be imposed on those who are responsible for an internal feud concerning the replacement of the computer system at Kookmin Bank,” an FSS official said, adding that the details of the punishment, had not been decided. Kookmin Bank is the flagship unit of KB Financial Group.

The financial watchdog launched a special investigation in mid-May into whether the top bank’s management and directorate exerted unjustified pressure concerning the replacement of the computer system.

In April, the bank’s board of directors decided to switch the current computing system, which is based on the conventional IBM mainframe, to a more flexible Unix server.

But the move was immediately met with vehement opposition from the management bracket headed by Kookmin Bank president Lee Kun-ho and backed by auditor Jung Byung-ki, who cited possible system risks.

Lee, up to last year, hinted that he was in favor of the newly-rising Unix system, so this sudden shift of stance led the directors to suspect a possible shady deal between the management and IBM.

In a counterattack, the management demanded government involvement, claiming that the board may have taken favors from Unix operators.

Further complicating the situation is that the outside directors wanting to switch to Unix are allegedly backed by KB Financial Group chairman Lim Young-rok, suggesting that the strife is not actually between the bank and the directors, but between the bank and its parent company KB Financial Group.

In the initial stage of the feud, the FSS took a step back from technical judgment and stuck to the explicit communication side of the issue.

“The board, though its judgment should be respected, is responsible for procedural flaws, such as turning a deaf ear to opposing claims,” said the FSS official.

Lee and Jung, too, should share responsibility for causing a grave disturbance within the bank, according to the financial watchdog.

By Bae Hyun-jung (tellme@heraldcorp.com)