Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Banking CEOs to make rare appearance at Assembly audit over irregularities
Financial Supervisory Service (FSS) Governor Lee Bok-hyun, front row fourth from right, poses with CEOs of commercial banks during their meeting at Korea Federation of Banks building in Myeong-dong, central Seoul, in this photo taken on June 20. The National Assembly will summon the CEOs of all five biggest banks as witnesses in its audit of the FSS, Tuesday. Yonhap
By Yi Whan-woo
By Yi Whan-woo
The CEOs of five major commercial banks will be summoned to the National Assembly for an audit, Tuesday, in the wake of fraud, embezzlement and other serious irregularities involving lenders.
The five CEOs ― Lee Jae-keun of KB Kookmin Bank, Jin Ok-dong of Shinhan Bank, Park Sung-ho of Hana Bank, Lee Won-duk of Woori Bank and Kwon Jun-hak of NH Nonghyup Bank ― will appear as witnesses for the audit of the Financial Supervisory Service (FSS).
This is the first time since 2017 for the chiefs of all five major banks to be summoned as witnesses in an annual parliamentary audit, according to political and financial sources, Monday.
“The planned appearance of the witnesses suggests the grave nature of irregularities concerning banks and that the Assembly is determined to grill the banking CEOs over relevant issues,” a source said.
Another source speculated the Assembly seeks to capitalize on the audit “to tighten discipline” within the banking industry and prevent further irregularities.
The FSS has been asking the banks to enhance self-regulatory control and risk management, after multiple lenders were found to fall short in safeguarding clients' assets.
According to recent FSS data, a total of 128 embezzlement cases were reported between 2012 and 2021 involving KB Kookmin, Shinhan, Hana and Woori, which are collectively referred as the “Big Four” in the banking industry.
The losses inflicted on the four during the cited period were more than 42.6 billion won.
Such financial crimes are growing in scale. For instance, a single case of embezzlement orchestrated by a Woori Bank employee over the past several years and disclosed in spring of 2022 turned out to be worth 61.4 billion won.
The FSS in September also found more than 10 trillion won ($7.22 billion) worth of dubious funds sent abroad by 82 firms via local banks in transactions suspected of being linked to cryptocurrency markets.
The case involves 12 lenders nationwide, including Shinhan Bank, which handled the largest $2.36 billion worth of transactions, while Woori Bank, Hana Bank and KB Kookmin Bank dealt with $1.62 billion, $1.08 billion and $750 million respectively.
It is suspected such remittances might have been aimed at cashing in profits from price gaps of cryptocurrency assets between Korean and overseas markets and laundering money.
The banks have additionally been under mounting criticism for reaping huge loan-deposit margins over steep rates hike in the midst of high inflation.
According to the FSS, the weight of interest income accounts for around 86.5 percent of the banks' total profits.
The lenders have been lowering spreads on lending rates and cutting commissions, as part of efforts to ease the burden on borrowers struggling with snowballing debt.