South Korea's top financial regulator on Friday suspended the chairman of KB Financial Group Inc., the country's fourth-largest banking group by assets, for management failures, upgrading the punishment proposed by the watchdog.

The Financial Services Commission (FSC) said it decided on a "suspension" penalty for KB Financial Chairman Lim Young-rok for mishandling internal affairs over the group's selection of a new computer system.

The penalty, the second-highest among five tiers that the FSC can mete out to officials of financial institutions, requires three months of suspension, followed by immediate resignation.

Last week, Financial Supervisory Service (FSS) Gov. Choi Soo-hyun had imposed "censure" to Lim and the group's flagship Kookmin Bank President Lee Kun-ho, overturning a much lighter punishment by the FSS disciplinary panel. By law, reprimands against heads of banking groups require affirmation by the FSC.

Lee stepped down after the FSS' punishment, but Lim refused to resign, vowing to get to the bottom of the matter. (Yonhap)