South Korea’s biggest theft of personal information on credit-card holders prompted dozens of top executives at financial firms, including KB Financial Group Inc, to offer to quit this week as a regulatory probe widened.
Lee Kun-ho, chief executive of South Korea’s largest bank, was among 27 executives who sent resignation letters to KB Financial chief executive Lim Young-rok, an official at the Seoul-based company said yesterday, asking not to be named in accordance with company policy. Nine officials at Lotte Card Co also offered to quit, that company said in an e-mailed statement.
In a country where plastic is used for more than half of total consumer spending, thousands of customers asked that their cards be canceled, the regulator said yesterday.
South Korean prosecutors this month charged three people with stealing names, social-security numbers and card data tied to millions of customers of Lotte Card, KB Kookmin Card Co and Nonghyup Bank.
“The incidents will probably hurt the firms’ brand value and lead them to incur one-time costs, such as fines and compensation,” said Michael Na, a Seoul-based analyst at Nomura Holdings Inc. “It will spur regulators’ demands that financial companies protect consumers, which isn’t necessarily positive for earnings.”
While there is no evidence that the information has been misused, the companies will fully compensate victims for any damage, South Korean Financial Services Commission Chairman Shin Je-yoon told reporters on Monday. The regulator will consider revising rules to seek stricter punishment, including fines, he said.
South Korean President Park Geun-hye, speaking on a visit to Switzerland, demanded a thorough investigation and vowed to hold people responsible, according to an e-mailed statement from the leader’s office yesterday. She asked officials to prepare steps to prevent a repetition of the leaks, the statement said.
About 20 million card holders at Lotte Card and Nonghyup Bank, and 40 million at KB Kookmin Card were affected, the South Korean Financial Supervisory Service (FSS) said on Sunday. The estimate may include overlaps for multiple cardholders or former customers.
A total of 532,700 customers of the three companies asked to terminate their cards, while 616,800 demanded they be reissued, the FSS said yesterday in an e-mailed statement.
One of the people charged was a software engineer who was working for the three firms from May 2012 to last month and who copied client information onto a USB device before selling it to loan companies, the prosecutors’ service said on Jan. 8.
The FSS said on Sunday that it began probing operations at Kookmin Bank, the nation’s largest lender, in relation to information breaches at the card unit. It ordered 14 other financial firms to examine possible data theft, without disclosing the names of the institutions.
The agency also started inspecting local units of Citigroup Inc and Standard Chartered PLC on Friday last week after prosecutors last month found that their customer information had been leaked.