Four savings banks raided
By Kim Tae-jong
The prosecution raided the headquarters of four savings banks and houses of their executives Monday, following the financial authorities’ suspension of their business operations the previous day.
The four secondary banking institutions are Solomon, Mirae, Korea and Hanju, which will be suspended for the next six months.
The raid was the beginning of a separate investigation into the troubled banks, following an audit by the Financial Supervisory Service (FSS) that found the four had poor financial soundness.
The prosecution will additionally investigate their executives to see whether they were involved in irregularities such as embezzlement and breach of duty.
There have been allegations that the four banks offered illegal loans and executives created slush funds. Depending on the initial results, the prosecution will also summon major shareholders of the banks.
The prosecution also sought an arrest warrant for Kim Chan-kyung, chairman of Mirae Savings Bank, who was caught trying to sneak out of the country late Thursday.
He is charged with breach of trust as he was found to have withdrawn 20 billion won from the bank the same day ahead of his attempted flight, as well as violating a ban on leaving the country.
Meanwhile, despite concerns over bank runs, a panic did not occur at sister financial firms of the banks. When announcing the names of the four, the FSS expressed concerned over this possibility.
“The situation at the sister financial firms of the four savings banks is rather calm,” an official from the FSS said during a news conference. “We also dispatched officials there to ease unnecessary fears of account holders and to explain that the suspension will have no impact on these firms.”
He also emphasized that account holders will obtain payment guarantees of up to 50 million won under the law. Initially, there were some news reports that about 20 billion won would be withdrawn at sister firms.
On Friday alone, over 200 billion won was withdrawn from the four banks with hundreds of depositors lining up in front of branches before opening time.
The FSS also said they will take measures to protect stock holders of Solomon and Korea savings banks as their trading was suspended Monday, prior to determining whether to delist them.
“We will do our best to help the two savings banks avoid delisting and protect investors,” the official said. “We will support them so that they can normalize their business and improve their financial soundness within the given period of time.”