NH Bank cracks down on W11b internal failure

Headquarters of NongHyup Bank in Seodaemun, central Seoul (NongHyup Bank)

A NongHyup Bank employee is being investigated by local police for possible embezzlement reaching nearly 11 billion won ($8.2 million), the bank disclosed on Wednesday.

The bank's internal investigation revealed a financial irregularity that could extend up to 10.95 billion won, which is the total amount of the financial products the accused employee had handled at the related department between March 2019 until November last year.

According to an official from the bank, a 1.2 billion won disparity was discovered between the actual amount transferred by the borrower and the amount written on the loan contract during the internal audit.

The company has initiated a criminal complaint related to the incident and intends to pursue disciplinary measures through its internal personnel committee.

Whether the accused employee had committed the act alone, as well as the exact extent of the money involved and the damage inflicted on the bank, need to be checked through the police investigation, the official added.

Additionally, financial regulators are examining the matter. The Financial Supervisory Service will review the bank's internal investigation reports first and will conduct an onsite inquiry if necessary, reports showed.

This incident underscores a setback in the bank's efforts to bolster internal controls and uphold integrity, which the bank's CEO Lee Seok-yong has emphasized since last year.

The financial sector continues to grapple with small and large financial accidents, with the banking industry bearing the brunt of the burden.

Data from the Financial Supervisory Service compiled by Rep. Yun Chang-hyun of the People Power Party indicates that, from 2019 to July 2022, the total sum of financial irregularities within the country's five major lenders reached 99.2 billion won, with NongHyup Bank accounting for approximately 3 billion won of that total.

By Choi Ji-won(jwc@heraldcorp.com)