banks-internal control

Banks still lack internal control, risk management

SEOUL, Feb. 4 (Yonhap) -- South Korea's financial watchdog said Tuesday that it will map out a stricter supervisory system for banks and take stern measures against their lack of internal control systems and risk management.

According to the Financial Supervisory Service (FSS), Woori Bank, KB and NH Nonghyup had extended inappropriate loans worth a combined some 387 billion won (US$264 million).

Of them, Woori Bank was found to have extended shady loans worth 233 billion won, 70 billion won of which was extended to relatives of an ex-chairman of its parent firm, according to the watchdog.

Over 70 percent of such loans were already classified as soured, the agency added.

KB and NH Nonghyup were found to have been involved in inappropriate loans totaling 89.2 billion won and 64.9 billion won, respectively.

One of the banks had also concealed a loss worth 100 billion won by manipulating trading data, while many lacked proper risk management systems, according to the FSS.

The FSS said many banks have also failed to take proper measures to protect their customers.

The financial watchdog said it will draw up a set of systemic and stricter supervisory measures to prevent the recurrence of such cases.

It will also take stern measures against legal violations and encourage the banks to implement and enhance their risk management.

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