“Duped by fake assessment reports, IBK lent 150 billion won” ... Loopholes in IBK’s technology credit assessment lending

[The Financial News] IBK Industrial Bank of Korea was found to have made more than 150 billion won in loans after being deceived by technology credit assessment (TCB) reports suspected of being false. Police are investigating 312 technology credit assessment reports submitted to IBK to determine whether they were false. Critics say verification systems at assessment agencies and banks must be overhauled to ensure that technology finance—which provides funding based on assessments of technological capabilities and growth potential—works as intended.
On the 7th, according to information obtained from IBK Industrial Bank of Korea by Rep. Park Seong-hun of the People Power Party, a member of the National Assembly’s Political Affairs Committee, IBK lent a total of 157.2 billion won to 249 companies linked to assessment reports suspected of being false over the past seven years.
Police are investigating 312 reports submitted to IBK by technology credit assessment agencies on suspicion that they were false. As of July this year, the outstanding balance of loans IBK had made to the companies concerned still stood at 72.8 billion won. Loans to 17 of those companies had become nonperforming, with the amount totaling 4.7 billion won.
By assessment agency, the number of borrowers linked to assessment reports suspected of being false was 161 for e-Credible, 75 for Korea Rating & Data, 9 for SCI Information Service, and 4 for NICE Information Service.
Loans disbursed to companies assessed by e-Credible alone totaled 105.9 billion won, or 67.4% of the total. Separately, from 2022 through August this year, IBK referred technology credit assessment results for re-examination, changed ratings, and classified 214 cases as assessment errors.
By agency, NICE Information Service had the most assessment errors, with 75 cases. It was followed by NICE D&B with 47, Korea Rating & Data with 44, Seoul Credit Rating & Information with 25, e-Credible with 17, and Korea Technology Credit Evaluation with 6.
IBK said, “The same type of damage has been confirmed at 15 banks, including our own, and we are cooperating with the related investigation.”
Rep. Park Seong-hun said, “In a system that lends money on the basis of trust in technological capabilities, if the assessment report—the starting point of that system—is itself suspected of being false, trust in technology finance is bound to be shaken.” He added, “We must thoroughly examine how false assessments led to actual loans and whether the verification systems at assessment agencies and banks functioned properly,” and stressed, “We must also closely monitor the credit quality of loans that remain outstanding and strengthen verification and accountability systems for assessment agencies so that false or deficient assessments do not lead directly to loans from financial institutions.”
[email protected] Park Mun-su Reporter