[Exclusive] IBK Industrial Bank, Headquarters and Branches Ordered to Take Leave... Strengthening Internal Control Inspections

Mandatory Leave Implemented at Headquarters and Branches on February 4
Mandatory Leave System Revamped in 2023
Improper Loan Incident at IBK Industrial Bank of Korea Early This Year
Possibility of Regular FSS Inspection This Year
IBK Launches Self-Initiated Internal Control Inspection
Lee Bokhyun Stresses "Zero Tolerance for Financial Accidents"

IBK Industrial Bank of Korea has implemented the largest mandatory leave since its establishment. This is interpreted as a move to inspect internal controls following a financial accident worth 24 billion KRW that occurred earlier this year. The photo shows the exterior view of IBK Industrial Bank of Korea.

IBK Industrial Bank of Korea has been confirmed to have conducted the largest scale of mandatory leave since its establishment. This is interpreted as a move to inspect internal controls following a financial accident worth 24 billion KRW that occurred earlier this year.

According to financial authorities and the financial industry on the 11th, IBK informed all branches, including its headquarters, about the mandatory leave candidates on the 4th. Mandatory leave is a system where the company suddenly orders employees handling cash or other high-risk tasks to take leave and audits their work during that period.

IBK revamped its mandatory leave system in 2023 to strengthen its internal control system. Since then, it issues implementation documents for mandatory leave once each in the first and second half of the year. The number of employees subject to mandatory leave this year totals 5,206, the largest ever, following 4,989 in 2023 and 5,131 in 2024.

IBK’s notification of mandatory leave candidates to all branches is interpreted as a self-initiated high-intensity internal control inspection. Earlier this year, IBK disclosed a financial accident amounting to 24 billion KRW.

The accident occurred when a loan officer at IBK approved loans by inflating collateral prices to an acquaintance working in the real estate industry. The Financial Supervisory Service (FSS) also detected additional improper loans during an on-site inspection of IBK. Moreover, this improper loan incident happened while the FSS has been continuously emphasizing internal controls over the past two to three years. This is why IBK expanded the scale of mandatory leave compared to previous years.

An FSS official said, "Improper loan incidents have also occurred at other policy banks," adding, "Since IBK operates retail banking like commercial banks, it has a higher risk of financial accidents compared to other policy banks such as Korea Development Bank and Export-Import Bank of Korea."

FSS Governor Lee Bok-hyun said at the 2025 FSS work plan briefing yesterday, "In the financial market where information asymmetry is inherent, we will maintain a strict enforcement stance based on law and principles with zero tolerance for large-scale mis-selling, major financial accidents, and illegal acts for private gain," adding, "We will improve fundamental causes such as short-term performance-oriented management culture that triggers such unfair practices, insufficient internal controls, and lack of ethical awareness."

He also said, "We will check risks in loan screening that uses personal relationships among financial holding company chairpersons, bank presidents, and employees, and loans must be made according to principles and regulations," adding, "Regarding improper loan cases, this raises the issue of structures where internal controls do not function or related departments are practically not involved."

Because of this, there is speculation that if the FSS starts regular inspections of specialized banks this year, IBK will be the target. IBK last underwent a regular FSS inspection in 2020. Since the regular inspection cycle comes every five years and an improper loan incident occurred earlier this year, the possibility of a regular inspection is considered high.