Financial watchdog uncovers $266 million in improper loans at major banks
Published: 04 Feb. 2025, 11:33
Updated: 04 Feb. 2025, 17:45
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- PARK EUN-JEE
- [email protected]
Audio report: written by reporters, read by AI
![Financial Supervisory Service Governor Lee Bok-hyun announces the preliminary outcome of the regulator's probe into major banks in Korea on Feb. 4 at its office in Yeouido, western Seoul. [YONHAP]](https://koreajoongangdaily.joins.com/data/photo/2025/02/04/8d936a2d-3ade-467d-ba11-9d15232cfe78.jpg)
Financial Supervisory Service Governor Lee Bok-hyun announces the preliminary outcome of the regulator's probe into major banks in Korea on Feb. 4 at its office in Yeouido, western Seoul. [YONHAP]
Korea’s financial watchdog uncovered more cases of improper loan provisions at the country’s major banks — Woori, KB Kookmin and NH Nonghyup — and pledged to implement stricter internal control rules.
The total amount of improper loans made by the three banks ballooned to 387.5 billion won ($265.6 million), according to preliminary results the Financial Supervisory Service (FSS) released Tuesday, nearly double the initial estimate announced last year.
The regulator said that Woori Bank issued inappropriate loans worth 233.4 billion won in 101 cases, including 73 billion won given to borrowers with connections to former chairman Son Tae-seung. Of the 73 billion won in provisions, 38 billion won was detected during the latest round of investigation.
A total of 291 cases worth 89.2 billion won were discovered at KB Kookmin Bank, where the FSS alleges that bankers encouraged clients to forge documents.
NH Nonghyup Bank was involved in 90 cases in which 64.9 billion won worth of improper loans were issued.
A substantial part of the preliminary report was devoted to Woori Bank’s failures of internal control and risk management.
FSS Gov. Lee Bok-hyun stressed that the case pertains to the banks' systematic, structural problems rather to specific bad actors.
“Today’s briefing is intended to verify whether this incident is the result of a single individual’s fault or a reflection of an inherent corporate culture,” Lee told reporters.
“It is worth to note that the case didn’t simply occur during the tenure of former chairman [Son],” he said, implying that the problematic loans had continued during the current chairman’s term.
The FSS noted that 33.8 billion won, or 46.3 percent of the 73 billion in loans offered to people linked to the former chairman, have since become delinquent.
The outcome could impact the prospects of Woori Financial Group’s proposal to acquire controlling stakes in two life insurers for a total of 1.55 trillion won as the FSS will send its assessment of Woori to Financial Services Commission, which approves financial mergers and acquisitions.
FSS vowed to put in place the so-called accountability structure designed to better outline roles and responsibilities and foster an internal system to support compliance reporting from inside members, although it has yet to impose specific penalties on the three institutions.
BY PARK EUN-JEE [[email protected]]
with the Korea JoongAng Daily
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