IBK President Kim Sungtae Apologizes to Customers and Public for 88.2 Billion Won Improper Loans

“Diagnosing the Root Causes in Organizational Culture”
Announcing Reform Plans Including a Family Connections Database

On March 26, IBK Industrial Bank of Korea held an expanded executive meeting at its headquarters, where the attending executives collectively issued an apology and announced a reform plan in response to the Financial Supervisory Service's audit results on improper loans, which were released the previous day.

At the expanded executive meeting held on the 26th at the IBK Corporate Bank headquarters in Jung-gu, Seoul, Kim Sungtae, president of IBK Corporate Bank, is announcing an apology and reform plan. Provided by IBK Corporate Bank

The meeting was attended by all key executives of IBK Industrial Bank of Korea, including all board members, regional headquarters directors responsible for field operations, credit review center heads, and department heads in charge of internal controls.

President Kim stated, "I sincerely apologize to our customers and the public who may have been disappointed in IBK due to this incident." He pledged to treat the audit results as an opportunity for thorough reflection and to do his utmost to restore trust by implementing comprehensive follow-up measures and robust plans to prevent recurrence.

He further diagnosed, "These results were caused by gaps in internal controls and business processes, vulnerabilities in our systems, and an unreasonable organizational culture, including improper directives." He announced that the bank would carry out intensive reforms across business processes, internal controls, and organizational culture.

He also emphasized, "No matter how good our systems and policies may be, reform cannot succeed unless we ourselves change and put them into practice." He urged, "I ask that all IBK employees approach their work with the spirit of Hwanbu-Jaksin, meaning 'cutting out all that is festering and being completely reborn,' so that we can fundamentally renew ourselves."

As an immediate measure, the bank will strictly discipline employees involved in the incident and establish a database of employees' family connections. This aims to fundamentally prevent improper loans and conflicts of interest through relatives. For every loan, the bank will require a 'Certificate of Prevention of Improper Loans' from both the responsible employee and the credit reviewer, proactively avoiding conflicts of interest. Additionally, a new 'Approved Credit Review Organization' will be established to ensure the separation of sales and credit review functions.

To eradicate the practice of improper directives that undermine internal controls, the bank will strictly punish those who issue such directives and also discipline employees who comply with them, institutionalizing the active refusal to carry out improper instructions. The bank will also promptly establish an independent external whistleblowing channel, ensure that whistleblowers face no disadvantages, and implement immunity measures for voluntary reporters.

The 'audit function,' which checks for improper acts such as conflicts of interest, will also be reformed. The bank will bring in external experts to oversee audit process reviews and internal whistleblowing on misconduct within the audit department, and will operate an 'Audit Advisory Group' composed of both internal and external experts.

Alongside internal controls, the bank will establish a strict zero-tolerance policy in its organizational culture to root out leniency, and will strengthen duties and responsibilities by imposing severe disciplinary measures, such as dismissal, for management misconduct or inadequate internal controls. In addition, the bank will enhance financial ethics and internal control training to foster a desirable organizational culture.

IBK Industrial Bank of Korea stated, "To ensure that today's reform plan is not just a one-time declaration, we will form the 'IBK Reform Committee' to implement and continuously manage these measures swiftly." The bank pledged, "Through these reforms, we will build a robust internal control system, faithfully fulfill our core mission of supporting small and medium-sized enterprises, and do our utmost to become a trusted bank that helps SMEs, small business owners, and contributes to revitalizing the Korean economy."