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.
IBK head apologizes for $60.2 mil. in improper loans
Industrial Bank of Korea (IBK) CEO Kim Sung-tae apologizes and announces measures to overhaul the organization during a meeting at IBK's headquarters, Wednesday. Courtesy of IBK
By Lee Yeon-woo
Industrial Bank of Korea (IBK) CEO Kim Sung-tae issued an apology Wednesday and announced a comprehensive reform plan in response to the Financial Supervisory Service's (FSS) findings on improper lending practices totaling 88.2 billion won ($60.2 million).
"I extend my sincere apologies to our customers and the public who may have been disappointed by this incident," Kim said. "We will take the FSS audit findings as an opportunity for serious reflection and will make every effort to restore trust."
Kim delivered the apology during a meeting at IBK's headquarters attended by all senior executives of the bank, following the FSS announcement on Tuesday.
The investigation revealed that a retiree with 14 years of work experience at IBK engaged in real estate development and colluded with 28 IBK employees. These included his spouse, who still works at the bank, colleagues and business associates.
Between June 2017 and July 2024, the retiree submitted falsified loan documents, with IBK employees either conspiring with him or turning a blind eye to the misconduct. With additional minor cases included, the total amount of improper loans uncovered amounts to 88.2 billion won.
Kim attributed the incident to shortcomings in internal controls, systemic vulnerabilities and an irrational organizational culture driven by improper directives. In response, he pledged to carry out sweeping reforms. He vowed stern disciplinary actions for employees found to be involved.
The bank will introduce system changes, including a database of employee relatives to prevent improper lending through personal connections. Additionally, both the responsible loan officer and the credit reviewer will be required to submit a declaration for each loan to prevent abuse. A new review unit will also be created to oversee approved loans.
To eliminate the practice of improper directives that undermine internal control, the bank will introduce strict penalties not only for those who issue such instructions but also for those who carry them out.
IBK said a committee will be formed to ensure the newly unveiled reform plan becomes more than a symbolic gesture.
"No matter how well-designed our systems and policies may be, meaningful reform cannot succeed unless we ourselves are willing to change and take action," Kim said. "I urge all employees to approach their work with a spirit to root out what is decayed and be completely renewed so that the organization can truly transform."