Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
4 major banks spend $178 mil. on legal fees
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By Anna J. Park
By Anna J. Park
Major local banks' spending on legal costs has soared in the last couple of years, in their efforts to defend themselves from financial authorities' punishments for some key financial scandals and accidents.
According to documents submitted by the Financial Supervisory Service (FSS) to main opposition Democratic Party of Korea (DPK) Rep. Lee Yong-woo, four major banks ― KB Kookmin, Shinhan, Hana and Woori ― have spent nearly 250 billion won ($178 million) in legal fees since 2018.
Woori Bank's spending of 98.9 billion won on legal fees was the largest amount among the four, followed by Hana Bank's 83.2 billion won. Shinhan and KB Kookmin spent 48.2 billion won and 18.8 billion won, respectively.
The major local lenders' legal costs have particularly soared since 2020, as they were mired in a series of financial accidents, including Woori and Hana's derivative-linked funds (DLF) cases as well as banks' and brokerage firms' mis-selling of problematic funds. For instance, the Financial Services Commission (FSS) imposed multi-layered sanctions in May 2020 on Woori Bank and Hana Bank regarding their responsibility in the DLF cases.
Prior to 2020, the four banks' aggregated amount of annual legal fees stood at 41.4 billion won in 2018 and 40.7 billion won in 2019. Yet, the figure rose quickly to 77.1 billion won in 2020 and 63.9 billion won in 2021, as the lenders responded to the financial authorities' sanctions on several such incidents.
Besides trials related to the financial authorities' sanctions and suits to invalidate them, the four major banks are also mired in various legal cases. As of the end of June, KB Kookmin Bank is involved in a total of 125 cases, with 657.3 billion won demanded by plaintiffs. Hana, Woori and Shinhan banks also have over 100 ongoing legal cases.
“Banks need to strengthen their internal control standards to prevent further unnecessary legal cases,” Rep. Lee said.