Woori Bank's Sohn Tae-seung Faces Ongoing Fallout Over 'Improper Loans'... Wife's Corporate Loans Also Under Scrutiny

The fallout from the improper loan scandal involving Son Tae-seung, former chairman of Woori Financial Group and relative of Woori Bank, continues unabated. This time, it has been revealed that a corporation established by his wife and relatives received a large loan from Woori Bank during the process of purchasing real estate.

Woori Bank maintains that the loan in question complied with procedures and conditions, and therefore does not constitute an improper loan. However, both inside and outside the financial sector, there are criticisms that, given Son’s position as the sitting chairman of Woori Financial Group at the time, his conduct was not ethically appropriate. The Financial Supervisory Service (FSS) is also reviewing the matter legally, stating that it is "not normal."

According to financial sources on the 16th, Son’s wife, Ms. Kim, established a real estate rental and consulting company, Company A, in June 2021 and purchased a building in Seoul for 16.5 billion KRW. The company was reportedly established with equal capital contributions from Ms. Kim and her relatives.

A significant portion of the building purchase funds came from a loan from Woori Bank. Company A signed a contract with Woori Asset Trust, a subsidiary of Woori Financial Group, and received approximately 13.9 billion KRW in a real estate collateral trust loan from Woori Bank. This amount corresponded to about 85% of the building’s purchase price. The interest rate applied at the time was 2.92% per annum. One year later, Company A refinanced the loan with another commercial bank’s loan product and fully repaid the loan from Woori Bank.

Both Woori Bank and financial authorities maintain that the loan complied with procedures and conditions and does not qualify as an improper loan. A Woori Bank official stated, "Even at the time of the initial loan, the interest rate was about 10 basis points (1bp=0.01%) higher than conservative estimates, and one year later, the loan was refinanced with a product from another bank with a lower interest rate due to rising rates. Internally, we do not consider this an improper case, and to our knowledge, it is not included in the improper loans announced by financial authorities."

However, within the financial sector, while the loan may not have been handled improperly, there are considerable ethical concerns. A financial sector official commented, "At the time, Son was the sitting chairman of Woori Financial Group and held influence over its affiliates. It’s akin to adjusting your hat string under an apricot tree," referring to the Korean proverb implying inappropriate behavior under one’s own authority.

The Financial Supervisory Service also views the transaction as abnormal. An FSS official said, "The bank claims there were no procedural or regulatory issues, but the fact that the wife of the holding company’s chairman or bank president held more than 50% of the shares in the company receiving the loan itself poses a potential conflict of interest," adding, "We are conducting a legal review."

Meanwhile, the FSS previously revealed that Woori Bank had extended approximately 35 billion KRW in improper loans to Son’s brother-in-law, Mr. Kim, from 2020 through early this year. Mr. Kim is also suspected of impersonating an honorary branch manager of Woori Bank. The branches where Mr. Kim acted as honorary branch manager were Sindorim-dong Financial Center and Seolleung Financial Center, which were also workplaces of Director Lim, who approved improper loans to Mr. Kim. Woori Bank has filed a complaint against Director Lim and others on charges of breach of trust.

A Woori Bank branch in Seoul. Photo by Jinhyung Kang aymsdream@

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