Following Commercial Banks, Policy Banks Also Warn Employees to 'Refrain from Investments'
Concerns Over Moral Hazard Incidents in Case of Losses
Prohibition of Transactions During Work and Excessive Borrowing Investments
[Asia Economy Reporter Kim Jin-ho] A virtual currency warning has been expanded to all banks. As volatility in the virtual currency market has recently surged, national policy banks have actively requested their employees to 'refrain from investing,' following commercial banks. This appears to be an effort to preemptively prevent moral hazard, where investment failures might lead to employees misappropriating customer or bank funds.
According to the financial sector on the 18th, three national policy banks?KDB Industrial Bank, Korea Eximbank, and IBK Industrial Bank?recently distributed a "Notice Regarding Virtual Currency Transactions" to their employees, focusing on establishing work discipline.
Korea Eximbank has recently strengthened awareness-raising activities related to virtual currency transactions for its employees. The notice included warnings about investment scams using virtual currencies, prohibitions on trading during working hours, and advisories against excessive borrowing beyond repayment capacity.
Additionally, to discourage virtual currency trading itself, internal control provisions related to employee conduct codes have been established and implemented. These explicitly prohibit trading based on information obtained during job duties and also forbid providing such information to others to assist their investments. This is interpreted as a measure emphasizing that employees should avoid any involvement with virtual currency transactions in any form.
IBK Industrial Bank also communicated work discipline guidelines to all employees, urging them to "refrain from investing in virtual currencies." An IBK official stated, "We informed employees that if virtual currency trading is detected during work hours, it could negatively affect their performance evaluations." KDB Industrial Bank is also reported to have disseminated similar guidelines to its employees.
Major commercial banks have also urged their employees to refrain from investing in virtual currencies and have taken steps to enforce internal discipline. KB Kookmin Bank issued a notice last month titled "Work Ethics Regarding Virtual Currency and Stock Trading." A KB Kookmin Bank official explained, "We usually provide periodic reminders only about stock trading, but this time we included virtual currency due to the recent increased volatility." Hana Bank and Woori Bank are also regularly advising their employees to be cautious about virtual currency investments.
Virtual Currency Investment Craze Spreads to Banking Sector... "Proactive Prevention of Moral Hazard Needed"
The reason banks have rushed to issue warnings is due to the spreading craze for virtual currency investments among bank employees, raising concerns that moral hazard could occur if employees resort to using customer or bank funds to cover losses. In fact, in 2019, an IBK Industrial Bank employee was caught by the Financial Supervisory Service for embezzling 2.405 billion KRW by prematurely terminating customer deposits to invest in virtual currencies.
Particularly, the recent sharp increase in volatility in the virtual currency market is cited as a background for banks issuing warnings. For example, Bitcoin, a representative virtual currency, has experienced daily volatility such as a 12% drop followed by a 7% rise triggered by a single comment from Tesla CEO Elon Musk.
A bank official said, "Due to the conservative nature of our organization, we urge employees to refrain from investing to prevent incidents in advance," adding, "This measure considers the significant damage that could occur to an organization that demands high moral standards if financial accidents happen."
However, the lack of legal enforceability of employee conduct codes remains a concern for banks. Most banks prohibit employees in departments related to corporate affairs from trading stocks and require other employees to report their stock trading activities.
But in the case of virtual currency investments, there is no legal basis to enforce restrictions beyond recommendations through conduct codes. Another bank official pointed out, "Although we prohibit investments during working hours through conduct codes, coin trading happens 24/7, so it seems meaningless," adding, "Ultimately, preventing incidents depends not on conduct codes but on the employees' own will."
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