Korea suspends four savings banks

08-May-2012 Intellasia | AFP | 7:05 AM Print This Post

South Korea’s financial watchdog on Sunday suspended four savings banks because they failed to meet financial-strength standards, after one bank boss was caught trying to flee to China.

The four ordered to halt their operations for six months are Solomon, Mirae, Hanju and Korea Savings Bank, the Financial Services Commission said, amid moves to tighten the banking industry in South Korea.

“All operations of the savings banks including Internet banking were suspended from 6:00am today,” the regulator said in a statement.

They were told to appoint new managers and improve their finances within 45 days. They will be put on sale if they fail to do so.

File photo shows office workers in Seoul. South Korea's financial watchdog on Sunday suspended four savings banks for six months because they failed to meet financial-strength standards, after one bank boss was caught trying to flee to China. (AFP)

Depositors would be allowed to get back up to 50 million won ($44,000) to avoid a run, the commission said.

It promised to investigate any irregularities by major shareholders and executives of the banks. They were ordered to stay in South Korea for questioning.

Mirae chair Kim Chan-Kyong was arrested late Thursday while trying to sneak out of the country at a port in the southwestern city of Hwaseong, prosecutors said.

Kim had tried to leave for China by boat in an attempt to avoid investigation and possible punishment over alleged irregularities, Yonhap news agency said, adding four accomplices were also detained by the coastguard.

Last year, the financial watchdog suspended 16 savings banks found to be in difficulty, mainly due to reckless investments in risky property projects.

Financial regulators have launched an extensive probe into irregularities by savings banks since Busan, the country’s largest savings bank, was suspended in early 2011.

In February, Busan’s eight executives received jail terms of up to 14 years for offences including a lobbying operation aimed at keeping the bank open and $5.3 billion of illegal lending.

Busan was found to have lobbied politicians and government officials to avoid having its operations suspended.

Prosecutors have questioned thousands of people and dozens of government officials, bank executives and others have been charged with corruption. Three bankers have committed suicide.

http://sg.news.yahoo.com/south-korea-suspends-four-savings-banks-035744187.html

 


Category: Korea

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