South Korea’s top regulator said it will issue a warning to Kookmin Bank after a probe discovered improper management at the country’s biggest lender had caused some $948 million in losses to the bank.
The Financial Supervisory Service also penalised Kookmin’s former CEO Kang Chung-won and other current and former officials for causing the losses as they failed to properly manage risks involving a foreign bank acquisition and bond sales among other mishaps.
Kookmin Bank said it has no immediate comment as it has yet to receive formal results of FSS investigation.
A financial institution is forced to suspend its operation in Korea if they receive three institutional warnings in three years of time period. Kookmin, the biggest unit of KB Financial Group (105560.KS), has received no such warnings in the past three years.
The losses are related to Kookmin’s failure to properly conduct due diligence on its stake purchase of Kazakhstan’s CenterCredit CCBN.KZ in 2008 and costly sale of covered bonds in 2009, a FSS official said after briefing on the case late Thursday night.
Shares in KB fell 1.3 percent by 0115 GMT versus a 0.3 percent drop in the wider market.KS11.