On May 1, 2017, BNK Financial Group and former CEO were indicted by the Busan District Court for violating the Capital Markets and Financial Investment Business Act.

BNK has taken the following series of steps to prevent management risks from the concentration of power on CEO and weakening of external checks, especially by separating CEO and Chairman of board of directors, and by appointing outside directors as chairman of the board of directors.

We also have a process to identify the causes of corruption and reputation risks found during management activities, and to implement improvement measures as soon as possible.

• 1. By separately appointing the chairperson of the group and the president of Busan Bank, the main subsidiary, we reduced the authority of the chairperson of the group and declared autonomous management of the subsidiaries.
• 2. We appointed the chairperson of the board from the independent directors, and increased the number of independent directors to establish a more independent operation of the board.
• 3. The nominating committee, which can influence the appointment of the CEO and independent directors, is composed of independent directors only, excluding CEO and executive directors, to ensure independent and transparent CEO succession and appointment of independent directors.
• 4. To closely examine decision-making processes in the group, inspection officers were recruited, and the department head position of the Group Inspection Department was created to strengthen internal control over the entire group.
• 5. We established a Transparency Committee, under the Sustainability Committee, where all members are outside experts, to provide advice on transparent decision-making of the group and discuss measures for improvement. Group operations will reflect their conclusions. In addition, in April 2018, a White Paper on Non-Performing Loans was published to share key examples of nonperforming loans, and a Guide was shared and distributed within the group to prevent similar practices from occurring.
• 6. The Group Risk Management Division ensures that strategic or reputation risks are reflected in the group's internal capital, and the management system now calls for matters related to such risks be measured on a regular basis and discussed at the Risk Management Committee and Supervisory Committee meetings.