Memorandum of Understanding between Woori Finance Holdings and Kyongnam Bank



 Exhibit 4.8 
  
 AGREEMENT 
 ON 
 THE MANAGEMENT OF THE IMPLEMENTATION OF THE MANAGEMENT IMPROVEMENT PLAN 
  
 Woori Finance Holdings Co., Ltd. (“WFH”) and Kyongnam Bank (“Kyongnam”) made and entered into the following agreement
(the “Agreement”) to concretely implement theAgreement on Implementation of the Management Improvement Plan (“Management Improvement Plan”) between WFH and Korea Deposit Insurance Corporation (“KDIC”) dated July 2,
2001, under Article 6 (Execution of Agreement between WFH and the Subsidiaries) of the Management Improvement Plan. 
  
 Article 1 Purpose 
  

	 	1.1	 	The purpose of this agreement is to set forth the terms and conditions required for WFH to define the roles of WFH and Kyongnam, the authority of WFH over Kyongnam, the obligations
and responsibilities of Kyongnam to WFH, so that WFH may become a competitive financial group (the “Group”) and increase its corporate value and any other items necessary to recover public funds invested in Kyongnam in a timely and
profitable manner, and become a competitive financial group (the “Group”). 

  
 Article 2 Roles of WFH 
  
 WFH will fulfill the following items to effectively implement its overall business policies and strategies, including: 
  

	 	2.1	 	Assign individual business goals to each of its subsidiaries to achieve the overall goal of the Group; 

  

	 	2.2	 	Discuss and coordinate any decisions that may have a material impact on Kyongnam, such as business plan, capital budgeting, dividend policy, and capital increases;


  

	 	2.3	 	Manage and develop Kyongnam’s human resource and implement an education program on a Group basis; 

  

	 	2.4	 	Enact, amend, or abolish articles or provisions of relevant rules and regulations, in order to efficiently implement business management of Kyongnam as defined in Article 15 of the
Financial Holding Company Act; 

  

	 	2.5	 	Establish and manage the criteria used to evaluate the business performance and compensation scheme of Kyongnam and its senior management; 

  

	 	2.6	 	Examine, or request for an examination, of the business activities and the assets of Kyongnam if WFH deems it necessary to do so, and exercise any corrective action and requests to
reprimand any employees concerned for violations of any relevant regulations and rules, or any unfair or wrongful business activities; 

  

	 	2.7	 	Manage public relations activities of Kyongnam and rebrand the Group’s corporate identity; 

  

	 	2.8	 	Organize and manage task forces for special projects, as well as, request to assign employees of Kyongnam to various task forces; 

  

	 	2.9	 	Request to amend the business action plans of Kyongnam under the Agreement; 

  

	 	2.10	 	Request to submit amendments to the Business Normalization Plan which was entered into between KDIC and Kyongnam; and 

  










	 	2.11	 	Request for necessary measures regarding to Kyongnam in order to achieve WFH’s business goals and enhance its corporate value. 

  
 Article 3 Roles of Kyongnam 
  
 Kyongnam will fulfill the following items to effectively implement
WFH’s business policies and strategies: 
  

	 	3.1	 	Achieve the business goals as assigned by WFH; 

  

	 	3.2	 	Consult with WFH regarding decisions that may have a material impact on their management, such as business plans, capital budgeting, dividend policy, capital increases, and
appointment of senior management; 

  

	 	3.3	 	Establish and implement an Action Plan (defined hereinafter) regarding WFH’s business improvement strategy and business restructuring; 

  

	 	3.4	 	Provide regular and timely reporting of Kyongnam’s business performance; 

  


	 	3.5	 	Observe relevant rules and regulations applicable to the Group which are enacted by WFH; 

  

	 	3.6	 	Agree to share consulting fees or expenses incurred for the purpose of building and implementing the Group’s business strategy, provided that Kyongnam benefits from such
consulting services; 

  

	 	3.7	 	Dispatch employees to special task forces deemed necessary by the Group; 

  

	 	3.8	 	Cooperate and support examinations or requests for examination by WFH, and report to WFH actions and results of correction or reprimands a result of examination; and


  

	 	3.9	 	Implement any other necessary measures as required by WFH. 

  
 Article 4 Action Plan 
  

	 	4.1	 	WFH may request Kyongnam to submit its action plan (“Action Plan”) necessary for WFH’s efficient implementation of the Management Improvement Plan, and Kyongnam shall
submit to WFH the Action Plan within one month from the receipt of such request. 

  

	 	4.2	 	The Action Plan as referred in Section 4.1 should include the following: 

  

	 	4.2.1	 	Quarterly milestones to achieve target financial ratios as referred in “Appendix 1”; 


	 	4.2.2	 	Business execution plans in connection to “Appendix 2”; and 


	 	4.2.3	 	Any additional factors as requested by WFH. 

  
 Article 5 Request for Proposed Supplements to the Action Plan 
  

	 	5.1	 	In the event where it is deemed that Kyongnam is not likely to implement the Action Plan due to revision of applicable laws and regulations, changes in the external environments
such as substantial changes in the market conditions and changes in WFH’s business strategies, Kyongnam may immediately report to WFH thereof and subsequently submit to WFH the proposed amendments to the Action Plan (“Proposed Amendments
to the Action Plan”). 

  

	 	5.2	 	In order to successfully achieve targets as described in the Management Improvement Plan, WFH may request Kyongnam to submit a proposed supplemental plan or such necessary measures
as correction or changes to the Action Plan or Proposed Amendments to the Action Plan in Section 5.1, Kyongnam should follow the request in the determined periods. 

  

 2 









	 	5.3	 	In case the event described in Section 5.1 occurs or in any other event that may threaten the attainment of the objectives under the Management Improvement Plan because Kyongnam
does not implement the Action Plan, WFH may request Kyongnam to modify the Action Plan to include the following: 

  

	 	5.3.1	 	Restrict sales of specific financial products; 


	 	5.3.2	 	Restrict investments on fixed assets, entry to new business, or new investment in stock; 


	 	5.3.3	 	Prohibit acquisition of assets with high risk of default or price volatility, or dispose high risk assets 


	 	          	 	that has already been purchased; 


	 	5.3.4	 	Improve or reduce of manpower and organization; and 


	 	5.3.5	 	Close, unify, or restrict new establishment of branch and organization, and dispose subsidiaries of the Kyongnam. 

  
 Article 6 Obligations to Implement the Action Plan 
  

	 	6.1	 	Kyongnam shall be obligated to implement in good faith the Action Plan except for the occurrence of a natural disaster, material national economic crisis or any other events of the
force majeure (collectively, the “Event of Force Majeure”). 

  

	 	6.2	 	Kyongnam shall obtain and submit to WFH the Letter of Undertaking, in the form designated under the Action Plan as attached hereto, each of which shall have been signed by the
incumbent officers as of the effective date of this Agreement and any other officer to be appointed by Kyongnam during the term of this Agreement. 

  

	 	6.3	 	Except for the case where Kyongnam fails to perform its obligations to implement the Action Plan in the Event of the Force Majeure as specified in Section 6.1 above, Kyongnam shall
not deny that such failure was caused by or resulted from its willful misconduct or negligence or any other similar reasons attributable to it. Furthermore, Kyongnam shall not claim that any problems arising out of the relationship with the officers
or employees, labor unions, creditors, debtors or any other interested parties of it shall be deemed as one of the Events of Force Majeure. 

  
 Article 7 Reporting and Reviewing on Implementation of the Action Plan 
  

	 	7.1	 	Kyongnam must submit to WFH a report on the implementation of the Action Plans (“Implementation Report”) so that WFH may inspect the process of the implementation of the
Action Plan and such report shall include the following matters: 

  

	 	7.1.1	 	Summary of changes in the market conditions during the relevant term; 


	 	7.1.2	 	Overview on the business and financial conditions including financial statements; 


	 	7.1.3	 	Description of the goals to be performed or attained during the relevant term in respect of each plan itemized in the Action Plan; 


	 	7.1.4	 	Contents and results of performance of each itemized plan as specified in the foregoing Section 7.1.3; 


	 	7.1.5	 	Any issues or problems incurred in the course of fulfilling the Action Plan during the relevant term; 


	 	7.1.6	 	Any itemized plans resulting in poor performance, the reasons thereof and measures for the remedy thereof; and 


	 	7.1.7	 	Any Action Plans for the immediately following term. 

  

	 	7.2	 	When reporting each of the items specified in the foregoing Section 7.1, Kyongnam shall not impair the accuracy and the integrity of the Implementation Report by adopting any
discretionary accounting methods or any other means. 

  

	 	7.3	 	Kyongnam shall submit to WFH the Implementation Report under Section 7.1 on a quarterly basis within one (1) month from the end of each fiscal quarter. 

  

 3 









	 	7.4	 	WFH may request Kyongnam to submit additional materials in addition to the report specified in Section 7.3 and Kyongnam may not reject WFH’s request for such additional
materials without any special reason. 

  

	 	7.5	 	Upon review of the Implementation Reports or additional materials as specified in Sections 7.1 and 7.4, WFH may inspect Kyongnam’s operations and financial conditions if WFH
deems it necessary to reveal the reasons for lack of performance. 

  
 Article 8 Request for Proposed Amendments to the Business Normalization Plan 
  

	 	8.1	 	If WFH deems it necessary for effective implementation of the Management Improvement Plan, WFH may request Kyongnam to submit to KDIC the proposed amendments to the Business
Normalization Plan (“Proposed Amendments to the Business Normalization Plan”) in connection to the Business Normalization Plan that was made and entered into by and between KDIC and Kyongnam. 

  

	 	8.2	 	Without any reasonable excuse, Kyongnam must submit to KDIC the Proposed Amendments to the Business Normalization Plan within one month from the receipt of such request.


  
 Article 9 Measures against the Failure of Implementation

  

	 	9.1	 	In the event where it is deemed that Kyongnam fails to perform any obligations hereunder, WFH may request Kyongnam to take any of the following measures with respect to its officers
or employees, which may include cautions, warnings, reprimands, salary reductions, suspensions, and dismissals, and in that case Kyongnam shall take such measures as requested by WFH and submit to WFH a report on the results of such measures taken
by it. 

  

	 	9.2	 	In the event where Kyongnam’s officers or employees delay in making such reports or make a false or fraud statement in such reports as specified in Article 7 or refuse,
interrupt, or neglect any performance of its obligations or any requests made by WFH according to this Agreement including but not limited to the provisions of Articles 2, 4, and 8, WFH may request Kyongnam to take any measures specified in Section
9.1 above and Kyongnam shall immediately take such measures and submit to WFH the results of such measures taken by it. 

  
 Article 10 Effective Period 
  

	 	10.1	 	This Agreement shall become effective from the date on which WFH and Kyongnam has affixed their respective seals and signatures hereto. 

  

	 	10.2	 	This Agreement shall become null and void at the time when Kyongnam is no longer a subsidiary of WFH in accordance with relevant laws and regulations unless there exists any other
special reason. 

  

	 	10.3	 	In such case KDIC is no longer the largest shareholder of WFH and the Management Improvement Plan shall no longer be in effect as stated in Section 13.2 of the Management
Improvement Plan, this Agreement shall continue to be in effect so long as Kyongnam is a subsidiary of WFH in accordance with relevant laws and regulations. However, this Agreement shall cease once a mutual agreement has been made between WFH and
Kyongnam. 

  
 Article 11 Miscellaneous 
  

	 	11.1	 	If any term or provision hereof is invalid or unenforceable for any reasons whatsoever, such invalidity or unenforceability does not affect the remaining parts of this Agreement.


  

	 	11.2	 	Any dispute arising out of or in connection with this Agreement or the performance of obligations hereunder shall be submitted to the non-exclusive jurisdiction of the Seoul
District Court to be a court of the first instance. 

  

 4 









	 	11.3	 	In the case there exist any discrepancies regarding the interpretation of this Agreement, Kyongnam will respect the interpretation by WFH to the extent that such interpretation is
consistent with the purpose of this Agreement as set out in Article 1 above. 

  

	 	11.4	 	This Agreement shall not affect any rights reserved by WFH as a shareholder or creditor, or any rights reserved by it under the Financial Holding Company Act and other relevant laws
and regulation. 

  
 Supplementary Provision

  
 Article 1 Effective Date of this Agreement and Conditions to Invalidity

  
 This Agreement shall be in effect pursuant to the resolutions of
Kyongnam’s board of directors on August 1, 2001 regarding the execution of this Agreement and provided that, the parties hereto fully understand such resolution. 
  
 August 1, 2001 
  

	 Woori Finance Holdings Co., Ltd.
	  	Chairman	  	Byung Chul Yoon
			
	 Kyongnam Bank
	  	Chief Executive Officer	  	Shin Chul Kang


  
 Appendix I. Supplement
Management Normalization Plan for Kyongnam Bank 
  
 A. Financial Ratio
Targets (Minimum Requirements) 
  

	(%, W100m)
	 Items

	  	2003

	  	2004


	  	Mar

	  	Jun

	  	Sep

	  	Dec

	  	Mar

	  	Jun

	  	Sep

	  	Dec


	 Capital adequacy ratio (%)
	  	10.5	  	10.5	  	10.5	  	10.5	  	10.5	  	10.5	  	10.5	  	10.5
	 Return on total assets (%)
	  	0.9	  	1.0	  	1.0	  	1.0	  	0.9	  	1.0	  	1.0	  	1.0
	 Expense-to-revenue ratio (%)
	  	52.0	  	50.0	  	50.0	  	49.0	  	53.0	  	52.0	  	50.5	  	49.0
	 Operating income per employee
	  	2.4	  	2.4	  	2.4	  	2.5	  	2.5	  	2.6	  	2.6	  	2.7
	 Non-performing loan ratio (%)
	  	2.2	  	2.2	  	2.1	  	2.0	  	2.0	  	1.9	  	1.9	  	1.8
	 Net non-performing loan ratio (%)
	  	1.4	  	1.4	  	1.3	  	1.3	  	1.3	  	1.3	  	1.2	  	1.2
	 	  	
	  	
	  	
	  	
	  	
	  	
	  	
	  	


  

  

	*	 	In the case that IT-related costs are different from target amounts (W2.26 bn in 2003, W2.62 bn in 2004), the return on total assets and expense-to-revenue ratio may be adjusted to
reflect the difference. 


	**	 	In the case that actual disposal timing and proceeds of our credit card operations are lower than our target timing and amount (W91bn by July 2003), the expense-to-revenue ratio and
operating income per employee may be adjusted to reflect the difference. 


	***	 	In the case that the return on total assets is below expected targets due to changes in policies concerning loan loss provisioning for corporate loans by the Financial Supervisory
Service, the return on total assets may be adjusted to reflect additional provisioning. 

  

 5 








 B. Non-Financial Requirements 
  

	Business

	 	 	 	 	  	 Plan

	  	Target Date


	Restructuring of
banking sector	 	 n
	 	 	  	Standardization and integration of IT	  	 
	 	 	 	 	·	  	Integration of IT	  	Sep 2003
	 	 	 	 	·	  	Share advanced Infrastructure	  	From Sep 2003
	 	 	 n
	 	 	  	Complete transfer of credit card sector to Woori Credit Card	  	Jun 2003
	 	 	 n
	 	 	  	Execute a business alliance agreement and agent fee agreement with Woori Credit Card	  	Sep 2003; Mar
2004
	 	 	 n
	 	 	  	Promote using unified Group logo and symbol	  	Dec 2003
	 	 	 	 	·	  	Use Group logo and symbol on bank sign, etc.	  	 
	 Other businesses
	 	 	 	 	  	Continue and improve operation on system set out from previous Management Normalization Plan	  	Continuous
	 	 	 n
	 	 	  	Set up effective operation plan on man power and expense	  	Continuous

  
  

 6