South Korea's financial watchdog has beefed up its inspections of the four major local banks in an effort to root out alleged irregularities in the banking sector, sources said Tuesday.
In a rare move, the Financial Supervisory Service (FSS) has started its probe into Kookmin Bank, Hana Bank, Shinhan Bank and Woori Bank all together in a bid to look into whether they might have been involved in suspected illegal activities.
"Suspicion over irregularities related to the four banking groups has continued to emerge," said an official at the financial regulator. "The inspections will focus on whether there are any mishaps in corporate management or negligence over consumer protection."
The move came as a debacle over the ailing Tong Yang Group's liquidity problems has revealed financial firms' greed and risky practices as well as the repercussions from lax supervision by the financial regulator.
The Tokyo office of top lender Kookmin Bank is suspected of raking in 2 billion won ($1.87 million) from illegal lending and sending the hefty commissions back home.
The FSS has also probed into suspicions that Kim Seung-yu, a former head of Hana Financial Group, might be involved in creating kickbacks by buying fine art.
Shinhan Bank has been under intense scrutiny over allegations the bank might have looked into politicians' bank accounts and private information illegally.
The FSS has inspected Woori Bank over its alleged sales of financial products without fully explaining the entailed risks to consumers.
The strengthened probe came as consumer protections are being improved at local financial firms.
Korean banks are under fire over what consumer advocacy groups call corporate greed and risky practices as they earn more interest income by charging a higher spread on borrowers such as households and smaller firms. (Yonhap News)
