IBK Industrial Bank Vows to Prevent Improper Loans with Comprehensive Reform

Company-Wide Reform Underway Following Large-Scale Improper Loan Incident

On July 10, IBK Industrial Bank announced that it is faithfully implementing its company-wide reform plan, which was established following the large-scale improper loan incident.

The bank's reform plan consists of five areas and sixteen tasks: loan process reform, internal control reform, organizational culture reform, audit operations reform, and strengthening management accountability. IBK Industrial Bank stated that it has completed thirteen of these tasks so far, and that the remaining tasks will also be completed as scheduled.

Starting this month, IBK Industrial Bank has begun requiring executives at the department head level and above to register family information in a database (DB), in order to strengthen internal controls over loans related to stakeholders and to prevent conflicts of interest. This is based on the principle of strengthening responsibility in line with the authority granted.

This DB registration is conducted entirely on a voluntary basis, with no set registration period, allowing for registration at any time. The registered information will be used in internal control procedures, such as strengthening approval authority. In the future, for loans related to employees' families, the branch manager's approval authority will be automatically restricted by the system, and loans requiring approval from the review center will be deliberated and decided by the head office's loan review department.

A new conflict-of-interest prevention checklist has been introduced, institutionalizing the requirement that, for every loan decision made by team leaders and above, the bank must check for loans related to employees' families or retired employees, and for potential conflicts of interest. In addition, the scope of the audit department's thematic audits has been expanded to include loans related to stakeholders, thereby strengthening post-approval monitoring.

To promote compliance reporting, an external independent reporting channel has been introduced, and internal regulations now include protection procedures to prevent personnel or evaluation disadvantages for whistleblowers, as well as a zero-tolerance policy for those involved in misconduct.

In addition, within July, the bank plans to launch an audit advisory group that includes external experts to reorganize its audit system. It will also establish a new organization (tentatively named the "Loan Culture Improvement Team") to advance loan decision-making and strengthen internal controls, with the aim of continuously inspecting and improving business processes and internal control systems.

Jung Soonseop, professor at Seoul National University School of Law and chair of the reform committee, stated, "This reform plan is significant in that it has established the institutional foundation to prevent the recurrence of improper loans and other conflicts of interest through comprehensive changes and reforms to IBK's internal control system." He emphasized, "Continuous monitoring and effective implementation efforts must continue in the future."