Industrial Bank of Korea CEO Kim Sung-tae on Wednesday issued a formal apology following revelations of widespread misconduct involving 90 billion won ($61.4 million) in improper loans by bank employees.
"We sincerely apologize to our customers and the public who may have been disappointed by this incident," Kim said, vowing to restore trust through rigorous oversight and strengthened safeguards.
His remarks came a day after the Financial Supervisory Service disclosed that 88.2 billion won in improper loans was uncovered during a routine audit earlier this year. The watchdog found that more than 20 individuals — including current and former IBK employees and affiliated parties — had systematically issued 51 improper loans between June 2017 and July 2024, with total exposure reaching 78.5 billion won.
In response, Kim convened a meeting with executives and department heads to assess the root causes and formulate corrective measures. He attributed the scandal to weak internal controls, gaps in work processes and an unhealthy organizational culture, pledging sweeping reforms across all these areas.
IBK is tightening oversight by creating a database of employees’ relatives to eliminate conflicts of interest and systematically prevent improper lending. Every loan issuance will now require both the responsible employee and a loan reviewer to submit a confirmation of compliance, while a dedicated internal unit will oversee approved loans to reinforce the separation of sales and credit review functions.
Addressing structural issues, the lender is appointing an external expert to oversee internal whistleblowing on misconduct and launching an audit advisory panel comprising internal and external specialists. IBK will also establish an independent whistleblowing channel and implement safeguards to prevent retaliation against whistleblowers.
To ensure the sustainability of these reforms, the bank plans to establish a "Revitalization Committee" to oversee internal controls and institutionalize changes.
According to the FSS, as of the end of February, the balance of improper loans at the state-run lender stood at 53.5 billion won, with 17.8 percent already classified as non-performing and the default amount expected to rise further.
The FSS also accused IBK of attempting to conceal or downplay the misconduct internally and failing to report the issue to authorities, despite becoming aware of it through an internal investigation last year.
jwc@heraldcorp.com
