The South Korean financial watchdog said Thursday it has cautioned troubled Kookmin Bank against a lack of supervision of its employees, which has led to corruption such as massive embezzlement and illegal loans.

The Financial Supervisory Service also reprimanded 68 Kookmin Bank officials involved in the scandals. One of the officials was reprimanded in two separate cases.

After conducting thorough inspections on the two different cases, the watchdog concluded that 51 employees had pocketed a combined 11.2 billion won ($11 million) through fake transactions of national housing bonds between March 2010 and November 2013.

The other 18 officials working in the bank's Tokyo branch were accused of having extended an estimated 530 billion won worth of loans to Japan-based Korean businesspeople with lower credit ratings, according to the FSS.

"The bank must lay down rules on basic procedures that its employees must comply with, and the employees must carry out their work in accordance with the rules," the FSS said.

"The company had not examined the Tokyo branch's credit risk (stemming from the excessive loans) during the period."

The watchdog's punitive measures came a week after the FSS slapped a relatively lighter punishment on Kookmin Bank President Lee Kun-ho and Lim Young-rok, chairman of the bank's parent, KB Financial Group Inc., for lax management over the handling of the bank's high-cost  computation system change.

A clash between the two leaders brought the issue to the surface, and the FSS intervened in the matter in May.

Lee filed a complaint with the prosecution on Tuesday against three executives of Kookmin Bank and KB Financial, rekindling the conflict between the holding company and its subsidiary. (Yonhap)