Kookmin Bank's '16.8 Billion Won Improper Loan'... Financial Supervisory Service Imposes Fine

Related Employees Face Dismissal or 3-Month Suspension Sanctions

The Financial Supervisory Service imposed a fine of 60 million KRW as an institutional sanction on Kookmin Bank for improper loans amounting to 16.858 billion KRW, and dismissed or suspended related employees for three months.

According to the Financial Supervisory Service on the 6th, an inspection by the Bank Inspection Division 1 confirmed that Kookmin Bank A Branch conducted improper credit screening on 67 loans (totaling 16.858 billion KRW) to 42 borrowers.

The team leader responsible for corporate finance at Kookmin Bank A Branch guided borrowers, who were introduced through real estate agents or directly sourced, to report income levels that allowed them to receive loans larger than the amount they could normally obtain from Kookmin Bank. Despite knowing that the submitted employment and income verification documents were falsified, the team leader processed the loans based on these documents. The employee personally altered four income certificates and one deposit balance certificate of some borrowers by copying and cutting and pasting the documents.

Furthermore, the team leader processed loans knowing that borrowers would use the loan funds for purposes other than those stated in the loan application documents, thus handling loans that did not correspond to the nominal borrowing purpose. Additionally, during credit screening, the team leader input income amounts higher than those on the borrowers’ income verification documents, requested new personal business registrations to increase loan limits regardless of fund usage, processed personal business loans, and handled loans without verifying the forgery or alteration of income verification documents, thereby conducting improper credit screening.

The Financial Supervisory Service also held Kookmin Bank accountable for improper post-loan management. Article 23 of Kookmin Bank’s internal credit regulations stipulates that all loans must be managed from issuance to repayment to ensure sound operation and smooth recovery by preventing misuse beyond the intended purpose and by complying with collateral and other approval conditions. The internal regulation "Post-Inspection Standards for Misuse Beyond Fund Purpose" requires that for all working capital loans, on-site visits or collection of supporting documents from debtors must be conducted within three months from the loan issuance date to verify the appropriateness of fund usage.

The Financial Supervisory Service stated, "During the period from September 16, 2021, to July 27, 2022, Kookmin Bank A Branch failed to properly conduct post-inspections for misuse beyond fund purpose for a total of 11 loans to 9 borrowers. They either did not attach documents proving the use of funds or only attached deposit and withdrawal statements, thus failing to prevent the misuse of loans beyond their intended purpose."