Prosecutors investigate head of Jeil Savings Bank

Prosecutors said on Monday they were investigating the head of a suspended savings bank over allegations that executives of the bank offered illegal loans and engaged in other financial irregularities.

Prosecutors earlier arrested Lee Yong-jun, president of the Jeil Savings Bank, along with another executive of the bank, with a court-issued warrant.

Lee was the first bank executive to be arrested since a joint investigative team composed of prosecutors, police investigators and related financial officials launched a probe on Friday into Jeil and six other savings bank recently suspended due to capital shortages.

Prosecution officials, however, refused to disclose the charges against the Jeil executives.

The interrogation is focused on determining whether the troubled bank illegally lent to unqualified borrowers, including the bank's major shareholders, and issued loans to unprofitable projects, according to other sources well informed of the probe.

Meanwhile, the head of Jeil II Savings Bank, an affiliate of Jeil and one of the banks suspended earlier this month, leaped to his death from the firm's headquarters in central Seoul on Friday, hours after prosecutors raided the offices and homes of the banks'

top executives and large shareholders.

About a dozen other savings banks were suspended in the first half of this year due to their capital shortages and deposit losses, driven by reckless investment decisions made by the bank heads and major shareholders.

Several heads and large shareholders of the banks were later convicted of embezzlement and breach of duty by causing massive losses for the lenders. (Yonhap News)