Financial accidents at Korean banks total $74.7 mn over 5 years

Sign boards of five major banks KB Kookmin, Shinhan, Hana, Woori, and NongHyup.

Financial accidents, such as embezzlements by bank employees, at South Korea’s five major lenders totaled 99.2 billion won ($74.7 million) over the past five years but only 10.8 billion won has been retrieved, data showed Tuesday.

According to data obtained by Representative Yun Chang-hyun of the People Power Party from the Financial Supervisory Service, the total amount of financial accidents at five major banks KB Kookmin, Shinhan, Hana, Woori, and NongHyup reached 99.2 billion won between 2019 and July this year.

Accidents from last year include a 60 billion won embezzlement case at Woori Bank and a real estate mortgage loan document manipulation incident worth 15 billion won at KB Kookmin Bank.

Among the financial accidents, embezzlement incidents involving customer deposits or company funds were the most frequent. Other types of financial incidents included fraud by outsiders and armed robbery at overseas branches.

Only 10.8 billion won, however, has been recovered.

Critics point out that the delayed detection and subsequent actions have resulted in a low recovery rate.

“Financial incidents have been recurring over the years, but the detection seems to be just the tip of the iceberg and the recovery rate is very insufficient,” Yun said. “Until trust in the financial sector is fully restored, banks should significantly expand the system of mandatory leave for employees handling customer funds, and the FSS should check the effective operation of such a system.”