Financial watchdog to get tougher on loose internal control

SEOUL, March 25 (Yonhap) — South Korea’s financial watchdog said Tuesday it will map out a stricter supervisory system for banks and other financial firms, and take stern measures against their lack of internal control systems amid the continued extension of inappropriate loans.

The Financial Supervisory Service (FSS) said Industrial Bank of Korea had extended inappropriate loans totaling 86.2 billion won (US$58.6 million), higher than its earlier estimate of 24 billion won, to the bank’s ex-employees and their family members.

The lender’s officials were also found to have received favors and gifts from borrowers over such inappropriate loans.

“(The FSS) will penalize such inappropriate practices and illegal loans in accordance with principles and related rules,” it said in a statement. “And more strict and detailed guidelines will be drawn up to prevent the recurrence of such cases.”

The FSS said earlier Woori Bank, KB and NH Nonghyup had extended inappropriate loans worth a combined 387 billion won.