South Korea

Yonhap | English | News | Feb. 5, 2025 | Regulation

South Korea's Financial Supervisory Service (FSS) is implementing a stricter oversight framework due to significant deficiencies in internal control and risk management among banks. Notably, Woori Bank, KB, and NH Nonghyup were found to have issued inappropriate loans totaling 387 billion won (about $264 million). Woori Bank was responsible for 233 billion won in questionable loans, including 70 billion won lent to relatives of a former chairman, with over 70% classified as non-performing.

KB and NH Nonghyup contributed 89.2 billion won and 64.9 billion won in inappropriate loans, respectively. One bank also concealed a 100 billion won loss through data manipulation, while many others lacked essential risk management measures. The FSS emphasized the banks' failures to protect consumer interests, announcing its intention to implement systemic measures to prevent recurrence of such practices.

FSS Governor Lee Bok-hyun criticized the financial sector's historical negligence regarding risk management and adherence to regulations. He stressed the need for accountability for illicit activities and noted that the FSS would evaluate Woori Financial Group's efforts to acquire a life insurer with a principle-based approach.

우리·KB국민·NH농협은행서 3800억원대 부당대출 적발···우리금융 생보사 인수 '비상'

ET News | Local Language | News | Feb. 5, 2025 | Corporate Corruption or Fraud

Unfair loans totaling 380 billion won have been uncovered at Woori Bank, KB Kookmin Bank, and NH Nonghyup Bank, with the Financial Supervisory Service (FSS) citing serious internal control failures, including bribery and document falsification. Woori Financial Group’s acquisition efforts for Dongyang Life Insurance and ABL are now jeopardized by these findings.

The FSS identified 482 cases of unfair loans worth 387.5 billion won across the banks. Woori Bank had the highest impact, reporting 101 cases totaling 233.4 billion won, including 73 billion won linked to former Chairman Son Tae-seung's relatives. KB Kookmin Bank reported 291 cases worth 89.2 billion won, while NH Nonghyup Bank found 90 cases totaling 64.9 billion won. The involvement of Son's relatives has raised significant concerns about Woori Bank's risk assessment practices.

Additionally, the FSS highlighted deficiencies in Woori Financial Group's capital ratio calculations that could lower its common equity capital ratio and jeopardize its management performance evaluation, necessary for its planned acquisitions. Governor Lee Bok-hyun stated that the evaluation process would be expedited to address market uncertainty.

Issues at KB Kookmin Bank included collusion among branch leaders to approve loans under false pretenses, while NH Nonghyup Bank faced similar collusion and acknowledged bribery of 130 million won by employees. The FSS has referred these cases to investigative authorities and plans to impose strict penalties for violations. Governor Lee emphasized the need for ethical reform and improved internal controls in the financial sector.

Chosun Ilbo | English | News | Feb. 5, 2025 | UndeterminedEconomic Growth

South Korean economists project a 1.6% growth for the economy in 2025, below the government's 1.8% forecast. This prediction is based on a survey of 100 economics professors conducted from January 6 to 17, revealing that 60% anticipate prolonged stagnation, while only 35% foresee a slow recovery after an initial downturn.

Regarding future trends, 64% expect stagnation to persist, with no respondents predicting a sharp rebound. Concerns about South Korea's industrial competitiveness are prevalent, as 56% of economists express pessimism, driven by worries over the U.S. Trump's economic and trade policies.

On the international front, 83% believe increased U.S. protectionism will adversely affect South Korea's export-driven economy. Only 8% see potential benefits from U.S.-China tensions or enhanced U.S.-South Korea cooperation.