By Na Jeong-ju

President Lee Myung-bak on Tuesday called for a thorough investigation into allegations that there was an exodus of funds from Busan Savings Bank just before its operations were suspended by the financial regulator on Feb. 17.

An initial probe by the Financial Supervisory Commission (FSC) showed some executives and employees of the lender informed major clients and relatives about the upcoming suspension and allowed them to withdraw savings in advance.

More than 19 billion won ($17.5 million) in deposits was withdrawn after business hours on Feb. 15 and 18.5 billion won on Feb. 16, according to the regulator.

“The investigation should be thorough and transparent,” Lee said at a Cabinet meeting after receiving a report from FSC Chairman Kim Seok-dong on the probe, according to presidential spokeswoman Kim Hee-jung.

“I believe this case represents a serious moral hazard among savings banks. Violators of laws should be punished.”

Lee also urged the administration to take advantage of the case to root out corruption and discrimination in various social sectors, saying crimes and ethical misconduct by wealthy and powerful people should be dealt with sternly.

The instruction came amid a public uproar over the “illegal” withdrawals at the Busan Savings Bank. Opposition parties called for a parliamentary probe into the case, alleging that it was not possible without discreet ties between the bank and finance officials.

The financial watchdog suspended the operations of the lender and a number of other savings banks due to massive construction financing loan defaults. The FSC is looking into whether there were similar violations at other savings banks before they were ordered to suspend operations.

The regulator itself has also come under heavy fire for failing to monitor the lenders.

The FSC chief said that the regulator already referred suspected employees and executives of the bank to the prosecution in March and an additional investigation is now under way by the Financial Supervisory Service.