Regulatory inspectors have launched a full-fledged investigation into the nation’s four biggest financial groups over allegations of business irregularities.

KB Financial, Hana Financial, Shinhan Financial and Woori Financial have been placed under a “simultaneous and extraordinary” probe, officials at the Financial Supervisory Service revealed Tuesday.

Main targets of the regulators include former Hana Financial Group chairman Kim Seung-yu and former KB Financial Group chairman Euh Yoon-dae, both of whom were close confidants of former President Lee Myung-bak, according to market insiders.

Hana’s Kim has been suspected of purchasing thousands of art pieces for irregular purposes during his term as group chief and receiving dubious incentives worth 3.5 billion won ($3.2 million) from the financial group when he stepped down from his post.

Hana Financial executives denied the allegations.

Kim has also been accused of committing irregularities during his involvement in the group’s takeover of Korea Exchange Bank from Lone Star Funds. Earlier, a group of lawyers, professors and civic groups filed a complaint against him with the prosecution for breach of trust.

KB Kookmin Bank, the flagship unit of KB Financial, has been under fire for an alleged slush fund scandal. Regulators are looking into the suspicion that its Tokyo branch engaged in running secretive funds for the bank’s management.

Market insiders say the FSS has found traces of evidence that the manager of the bank’s Tokyo branch pocketed large sums of fees while approving loans off the books.

The FSS inspectors discovered that a part of the commissions, worth more than 2 billion won, may have been transferred to a domestic account, and are investigating whether the money was sent to the lender’s management.

Shinhan Bank of Shinhan Financial has been under investigation over allegations that the bank might have illicitly accessed lawmakers’ bank accounts and private information.

Woori Bank of Woori Financial had reportedly conducted sales of financial products without fully explaining the risks to consumers.

By Kim Yon-se (kys@heraldcorp.com)