Kookmin Bank accounts for 9 in 10 loan-related incidents at five major banks, involving 40.6 billion won over five years

[Financial News] In the past five years, the five major banks reported 134 financial incidents that occurred within six months of a new loan being issued or a loan maturity being extended. The loans involved totaled 44.9 billion won, of which KB Kookmin Bank accounted for 40.6 billion won, or 90% of the total. Calls are growing for banks to review their internal control systems.
According to data from the five major banks (KB Kookmin, Shinhan, Hana, Woori and NH NongHyup) obtained by Kim Hyeong-yeon, a Rebuilding Korea Party lawmaker on the National Assembly’s Political Affairs Committee, a total of 134 financial incidents were reported from 2022 through July this year within six months of a new loan being issued or a loan maturity being extended. The loans involved totaled 44.925 billion won.
By type, there were 45 incidents involving personal loans. Of these, 33 involved real estate-related loans, including mortgage-backed loans and jeonse deposit loans. There were 89 incidents involving corporate loans: 63 occurred during the issuance of new loans and 26 during extensions of existing loans’ maturities.
Among the banks, Kookmin Bank had the most incidents and the largest loan amount, with 124 cases involving 40.638 billion won. It was confirmed that a considerable number of cases involved multiple loans linked to a single act of misconduct, each counted as a separate incident.
Notable cases included employees who, in order to boost loan performance, either reviewed loan applications based on income-verification documents despite knowing they had been forged or altered, or altered submitted documents themselves before issuing loans. Through these methods, corporate loans totaling 6.877 billion won and household loans totaling 7.088 billion won were issued across 52 accounts.
Cases of loans issued on the basis of false contracts also came to light. In some instances, loans were issued based on fraudulent sales contracts despite employees knowing that multi-unit commercial properties, which had remained unsold for a long time, were being offered at discounted prices; in others, loans were handled despite employees being in a position to know that lease agreements were false. The related incident records included corporate loans across 27 accounts, totaling 12.298 billion won.
Among the other banks, Hana Bank reported five cases involving 2.486 billion won, Shinhan Bank four cases involving 1.467 billion won, and Woori Bank one case involving 334 million won. NH NongHyup Bank reported no incidents during the period.
To prevent recurrence, Kookmin Bank proposed measures including automatically collecting income documents through Public MyData, strengthening procedures for verifying the authenticity of submitted documents, and conducting preliminary checks before corporate loans are disbursed. It also explained, “We maintained continuous monitoring and internal control procedures even after loans were disbursed, which also enabled us to detect warning signs in these cases early and respond swiftly.”
There are calls to review employee performance evaluation methods and the internal control system as a whole to fundamentally prevent financial incidents. Lawmaker Kim Hyeong-yeon stressed, “If an employee took part in falsifying documents to boost performance or issued a loan despite knowing a contract was false, simply improving the document-verification system is not enough. We need to check whether performance evaluations and compensation practices encouraged excessive lending, and why screening and internal controls failed to catch these problems in advance, and put effective measures in place.”

[email protected] Seo Ji-yoon Reporter