Gyeongnam, Kookmin, and Daegu Bank Presidents "Apologize"... Financial Supervisory Service Orders 'Direct Internal Control Inspection by Bank Presidents'

Bank Presidents Bow Their Heads as Employee Corruption Scandals Emerge

Meeting with 17 Bank Presidents on 'Internal Control and Household Debt'
Comprehensive Inspections Led by Bank Presidents and Submission of Signed Confirmation Required
Strict Disciplinary Actions for Employees if Financial Accidents Occur

A real estate project financing loan embezzlement incident involving approximately 56 billion KRW occurred at BNK Gyeongnam Bank. The photo shows a BNK Gyeongnam Bank branch in downtown Seoul on the 3rd. Photo by Jinhyung Kang aymsdream@

Ye Kyung-tak, President of Gyeongnam Bank, bowed his head and said, "I am truly sorry" regarding the 56.2 billion KRW embezzlement incident by an employee that occurred earlier this month, adding, "We will do our best to restore customers' trust and prevent recurrence."

Before attending the 'Bank Presidents' Meeting for Strengthening Internal Controls' hosted by the Financial Supervisory Service (FSS) at the Bank Federation in Jung-gu, Seoul on the 17th, President Ye told reporters, "We will do our best to restore customers' trust and prevent recurrence," and stated, "We are devising various recurrence prevention measures to strictly comply with the FSS's internal control innovation plans for banks."

At Gyeongnam Bank, an embezzlement incident involving 56.2 billion KRW in real estate project financing (PF) loans occurred. An employee who was in charge of real estate PF loan operations for about 15 years from 2007 to April of this year is currently under prosecution investigation on charges of embezzlement.

Lee Jae-geun, President of KB Kookmin Bank, also commented on the incident where some employees gained unfair profits of 12.7 billion KRW by using undisclosed information of listed companies, saying, "The related investigation is currently underway, and we will actively cooperate to ensure the truth is clearly revealed."

Regarding the criticism that the employees' misconduct was organized, President Lee said, "It is not certain yet, so we need to confirm how many people were involved."

Employees belonging to the securities agency department of Kookmin Bank allegedly obtained information in advance about the scale and schedule of free capital increases of 61 listed companies while handling these tasks from January 2021 to April this year, then sold the stocks of those companies under their own and family members' names to gain profits.

[Image source=Yonhap News]

Hwang Byung-woo, President of Daegu Bank, expressed, "I am sincerely sorry and regretful" regarding employees illegally opening about 1,000 securities accounts secretly from customers to boost performance, adding, "We are conducting an investigation and will thoroughly identify the causes to ensure that similar incidents do not occur in the future."

When asked about concerns that this incident might hinder the transition to a commercial bank, he refrained from commenting in detail, saying, "Since the investigation is ongoing, I cannot provide detailed information at this time."

Meanwhile, as a series of major incidents occurred in the banking sector this month, the Financial Supervisory Service has strengthened the responsibility of bank presidents by urging them to directly inspect internal control systems. On the 17th, Lee Joon-soo, Deputy Governor of the FSS's Banking and Small Business Division, held a meeting with 17 bank presidents at the Bank Federation in Jung-gu, Seoul, titled 'Meeting for Strengthening Internal Controls and Household Loan Management,' where he announced this.

Deputy Governor Lee said, "Please conduct a comprehensive inspection under the leadership of the bank presidents to ensure that the internal control system for accident prevention is effectively operating throughout the entire organization," adding, "The role of management is crucial for the internal control system to function in every corner of the business site."

Major domestic bank presidents are required to submit to the FSS by the end of this month a report on the implementation status of internal control innovation plans, similar recent incidents related to the recent accidents, and the current status of internal controls for accident prevention.

This content was produced with the assistance of AI translation services.