By Kang Seung-woo
The nation’s financial regulator said Monday that some relatives and friends of employees at Busan Savings Bank made withdrawals ahead of its business suspension in February.
“We have found that some relatives of its employees were allowed to take their money out without proper procedure during our inspection of the suspended savings bank,” said an official of the Financial Supervisory Service (FSS).
“The bank randomly cancelled the accounts and handed out money without verifying real names.”
The Financial Services Commission (FSC), the executive arm of the FSS, suspended Busan Savings Bank, the top savings bank by assets, and its affiliate Daejeon Mutual Savings Bank, on Feb. 17 for six months each after they failed to meet regulatory capital requirements.
Along with its own inspection, the FSS on Saturday looked into the bank’s list of customers who took out money on Feb. 15 and 16 to see if there were other improper cases of withdrawals, while looking at the lender’s closed-circuit television (CCTV) tapes.
The FSS plans to severely punish any unfair or illegal acts, as its Governor Kwon Hyouk-se said at a parliamentary hearing about troubled savings bank that he will file charges against illegal withdrawals.
However, the FSS denied a report by a local newspaper that about 30 VIP customers were called into two branches and allowed to withdraw their money, and that the bank reopened its financial network on the night before being ordered to halt operations.
According to the FSS, the network was running after the close of business because there was still high demand for withdrawals.
In addition, there were a number of customers who wanted to take money out, so it was not possible to call in a few of them and let them make withdrawals.
“There was no circumstantial evidence until now that some customers were allowed to withdraw money just prior to the suspension,” the FSS official said.
The FSS plans to check other suspended banks to see if there were similar cases.
The FSC has suspended the operation of eight ailing savings banks, including Busan and Daejeon, out of more than 100 players since January, due to weak capital strength and liquidity crunches sparked by deposit withdrawals.
Several ailing banks are widely expected to be put up for sale as the government is seeking to overhaul the sector, which was hit hard by the growth of soured large property-linked loans.