Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
BNK in damage control mode following multiple cases of employee malpractice
A man walks by a branch of BNK Kyongnam Bank in downtown Seoul, Aug. 2. Yonhap
By Lee Yeon-woo
By Lee Yeon-woo
BNK Financial Group is eager to restore public trust following multiple cases of illicit activities by a number of its employees. The group has recently been rolling out a series of measures to bolster internal controls at its banking subsidiary.
The group said Sunday that it established a team dedicated to analyzing the internal control activities of BNK Kyongnam Bank. The aim is to overhaul the existing system to prevent similar cases from happening in the future. The team operates directly under the supervision of the bank's CEO.
The team's mission is to review the bank's overall management system, strengthen oversight measures, and enhance the effectiveness of the whistleblower program. The group also plans to rotate employees who have worked for more than 3 years in branches and those who have served over 5 years in headquarters, aiming to mitigate further cases.
The group subsequently made personnel changes, moving 70 out of 100 employees who had overseen the same business operations for years at BNK Kyongnam Bank and BNK Busan Bank. The remaining employees will be repositioned by the end of the year.
“The internal control analysis team is to drive intensive innovation by evaluating (the current status) in a professional and objective manner,” said Lim Jai-moon, senior executive of the group. “All employees are committed to making every effort to transform into a bank that earns the love and trust of our customers.”
The group also runs an emergency management committee for the bank, which comprises external members to ensure independence in its operations.
BNK Kyongnam Bank CEO Ye Kyong-tak, center, and senior officials of the bank apologize for an executive's alleged embezzlement of 56.2 billion won during a press meeting at the bank's headquarters in Changwon, South Gyeongsang Province, Aug. 3. Courtesy of BNK Kyongnam Bank
Recent measures were prompted by employee crimes at BNK Kyongnam Bank, which have been making headlines. In a shocking revelation last month, an employee at the bank was discovered to have embezzled 56.2 billion won ($41.8 million) over 15 years from its project financing loan department.
Furthermore, it was disclosed on Saturday that the Financial Service Commission (FSC) imposed regulations on the bank in response to another case of employee embezzlement.
In June, the Financial Supervisory Service (FSS) discovered a branch manager had illegally utilized borrowed-name bank accounts for trading. The manager allegedly engaged in stock trading using his mother-in-law's account for 53 days. Three bankers from different branches were also caught opening bank accounts for customers without them being physically present at the branch and selling private equity funds without properly explaining the products.
Following the FSS's findings, the FSC imposed fines totaling 60 million won on the bank and an additional 10.5 million won on the offending branch manager. Disciplinary warnings were also issued to three other employees.
Commenting on the unethical behaviors exhibited by certain bank employees, FSS Governor Lee Bok-hyun vowed to eradicate such actions, emphasizing the imposition of the highest level of legal responsibility. 17 bank CEOs have been directed to submit improvement plans for their internal controls to the FSS by the end of the month.