Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
IBK chief in hot seat over 'unimpressive' results
Industrial Bank of Korea CEO Yoon Jong-won speaks to reporters in Seoul on Jan. 16, after failing to enter the head office of the state-run lender amid fierce protest from its union. Yonhap
By Lee Min-hyung
By Lee Min-hyung
Industrial Bank of Korea (IBK) CEO Yoon Jong-won is in the hot seat over his alleged failure to exercise strong leadership in the eight months following his controversial appointment.
Yoon took office as the head of the lender in January this year, amid internal opposition, as the IBK union argued the former Cheong Wa Dae economic chief was parachuted into the top post for “political reasons.”
Regarding the opposition, Yoon pledged to dispel such concerns by producing tangible management outcomes.
However, under Yoon's leadership, the lender has been mired in a set of controversies and failed to impress investors. As of the end of June, the possibility of potential bankruptcies among its customers reached 3.68 percent due to the massive loans it has provided to small business owners in efforts to help them counter the economic fallout of the pandemic.
The figure was twice as high as the 1 percent range of other commercial lenders such as KB, Shinhan and Woori, raising concerns that IBK is poorly managing its potential financial risks in comparison to other major lenders.
IBK's credit exposure also topped the list of 3.06 trillion won among the nation's leading banks. The term is used to indicate any maximum potential loss and compare banks' credit risks.
The figure took a turn for the worse, as IBK has been focusing on helping to rev up struggling self-employed people and operators of small- and medium-sized enterprises in the first half of the year while the local economy has been suffering serious setbacks due to the COVID-19 pandemic.
IBK's stock value has also remained in the doldrums this year without showing even any intermittent signs of a rebound since Yoon took office.
The stock price of the lender closed at 8,270 won for Monday trading on the KOSPI. Earlier this year, IBK shares were valued at around the 11,000 won range, but then nosedived to 5,860 won by March 19.
The drop was understandable given the pandemic crisis, according to watchers. But the main bourse has since bounced back rapidly. Despite the unprecedented stock market boom and recovery, IBK shares failed to make any meaningful rebound during the same period on a weak growth outlook, poor earnings report and continuous involvement in scandals.
IBK reported a decline of 16.8 percent in its net profit in the first half of this year, compared to a year ago. The lender cited an increase in the allowance for bad debts as the reason for the worsening performance during the period.
The latest in a series of controversies surrounding the moral hazard of the lender came last week, involving an employee's illicit purchase of real estate by issuing loans under his family members' names. Following the incident, Yoon is also being pressed to take more responsibility for the case.
The employee turned out to have in recent years secured a total of around 7.6 billion won in loans to purchase 29 properties ― including apartments and condominiums.
“As chief of the lender, I am very sorry for the latest incident,” Yoon said. “I have strongly ordered officials to improve systems to prevent the recurrence of such an incident.”
Despite the apology, calls are showing no signs of abating that Yoon should also be punished for his poor internal management as leader of the lender.
Noh Woong-rae of the ruling Democratic Party of Korea also stepped up criticism on Yoon's failure to take control of the bank and enhance internal discipline.
“Only the employee involved in the incident has been reprimanded, and that is why the government cannot root out speculators in the real estate market despite regulations,” Noh said.