IBK chief's leadership put to test by fraud accidents, relocation row

Industrial Bank of Korea (IBK) CEO Chang Min-young is facing a test of his leadership amid a series of fraud cases and growing tensions with the bank's labor union over a potential relocation.

According to documents obtained by Rep. Shin Dong-wook of the People Power Party from the Financial Supervisory Service (FSS) and IBK on Wednesday, the state-run lender failed to immediately detect a real estate loan fraud case last year, despite receiving a police search warrant detailing the alleged scheme.

The Incheon Metropolitan Police Agency sent IBK a search warrant and a request for cooperation on Sept. 24, 2025. The warrant said a real estate developer and brokers had allegedly used falsified sales contracts and down-payment records to obtain 965 million won ($722,000) in loans from the lender.

IBK received the warrant but did not immediately recognize the case as financial fraud. The bank only identified it as a fraud case on Oct. 2, after the FSS asked it to confirm the police investigation.

Even after reporting the fraud to the regulators, IBK extended an additional 1.9 billion won loan to one of the borrowers on Oct. 24. The loan was secured by a commercial property in Namyangju, Gyeonggi Province, and was later included in the same fraud investigation.

A second search warrant related to the case was received by an IBK branch in December the same year but was not forwarded to headquarters for a week, according to the documents.

The bank's internal review of 164.89 billion won in related loans also failed to flag irregularities in a timely manner.

Amid these lapses, the suspected fraud grew from the initial 965 million won to 4.7 billion won in June this year and snowballed to 18.22 billion won in August.

Regarding the issue, the bank said it has reviewed its internal controls over lending procedures and will swiftly implement necessary improvements.

"We reviewed the lending procedures related to the case. As the issue is currently under investigation, we will take necessary measures depending on the outcome of the probe," an IBK official said.

In a separate fraud case, IBK's Chinese subsidiary disclosed an 83.4 billion-won loss in July after a local online lending platform allegedly diverted loan repayments meant for IBK. The fraud went undetected from December 2025 until June this year, according to the FSS.

The repeated incidents have put Chang's handling of risk and internal controls under scrutiny just months after he took office in February this year. Chang had been regarded as an experienced risk-management executive within the bank, having served as head of its risk management department before becoming CEO.

He is also under growing pressure from the bank's labor union over a potential relocation of its headquarters to outside Seoul.

The government has not officially announced plans to move IBK, but speculation is growing that the state-run lender could be included in the government's broader push to relocate financial institutions outside the capital as part of its balanced regional development agenda.

The IBK's labor union, which strongly opposes the idea, has reportedly requested the CEO take a more active stance on the issue. It is also seeking to form a joint labor-management task force on the relocation issue, although management has yet to respond.