KB Kookmin Bank Faces Another Embezzlement Scandal... Excessive Loans Due to Inflated Income and Rent

Another case of excessive loan embezzlement has occurred at KB Kookmin Bank. The bank granted loans exceeding appropriate levels by inflating borrowers' income or rental income, and the Financial Supervisory Service is conducting an on-site inspection.

On the 9th, KB Kookmin Bank announced on its website that it confirmed two cases of 'breach of trust in the course of business' financial accidents through an internal investigation.

At a branch in Daegu, problems were found in household loans totaling 11.138 billion KRW, including mortgage loans handled from the end of August 2020 to March 8 of this year, where the borrower's income was excessively overestimated.

In the debt repayment ability evaluation process, even if collateral exists, the loan limit increases as the income level rises. KB Kookmin Bank explained that a certain employee applied income arbitrarily for performance purposes, resulting in excessive loans and breach of trust.

At a branch in Yongin, it was revealed that when granting 27.2 billion KRW in secured loans to buyers of a shopping mall in Dongtan, the Rental Income to Interest Ratio (RTI) for rental businesses was estimated higher than actual.

RTI is a standard used to determine the eligibility for new loans applied for by individual business owners for real estate rental purposes. For residential properties, the RTI must be at least 1.25 times, and for non-residential properties, at least 1.5 times. This means that the annual rental income from the property must reach at least 1.25 or 1.5 times the annual interest expense related to the rental loan. However, Branch B was reportedly negligent in verifying the authenticity of rental income supporting documents or tolerated discrepancies, resulting in excessive loans.

KB Kookmin Bank reported these findings to the Financial Supervisory Service earlier this month, and the FSS is currently conducting an on-site inspection.

Previously, on the 13th of last month, KB Kookmin Bank also disclosed a breach of trust financial accident where a branch in the Anyang area granted loans totaling 10.4 billion KRW by inflating collateral value to buyers of a shopping mall within a knowledge industry center.