Nonghyup Bank accused of unfair stock trading

By Chung Ah-young

Nonghyup Bank has been accused of engaging in unfair stock transactions in a bid to collect loans from STX Group last year, sources said Friday.

The Financial Supervisory Service (FSS) has completed its investigation on the lender, which allegedly used insider information that can be accessed by creditor banks, they said.

Under the capital market law, insiders who can gain access to closed information are not allowed to use it for the purpose of stock transactions.

The FSS will refer the case to a disciplinary committee under the wing of the Financial Services Commission (FSC) next month.

In October last year, STX disposed of 37 million shares of Pan Ocean, the country’s largest bulk carrier under the group’s wing, including 3 million shares from Oct. 8 to Oct. 18, which were set in collaterals of the loans extended by the bank.

About a week after the share sales, Pan Ocean decided to write down its equity of its stake in STX, its then largest shareholder, which caused the bulk carrier’s stock price to plunge to one third of the previous price.

The FSS suspects that the bank might have influenced STX’s share sale after obtaining information of Pan Ocean’s plan to write down its equity capital, which would cause a fall in the stock price.

Concerning the allegations, the bank strongly denied the accusations “We didn’t use any insider information. It is common sense that if the company files for a court receivership, its share prices will go down. STX made a decision on selling the shares of Pan Ocean through its own process,” a Nonghyup Bank official said.