According to financial authorities and the finance industry on the 30th, Welcome Savings Bank detected irregularities in the lending process in November last year, voluntarily reported the case to the Financial Supervisory Service and halted the product entirely. KB Savings Bank also disclosed in January that it had incurred losses of about 4.5 billion won.
The product in question was a “win-win” financing program designed to provide working capital to repair shops and parts suppliers. It treated repair estimates issued through the Insurance Development Institute’s vehicle repair claim or loss-adjustment system (AOS) as sales receivables and extended loans on that basis. Once repairs were completed, the banks recovered the loans from insurance payouts.
Authorities said fraudsters exploited the structure by obtaining false repair estimates through AOS to secure loans. To evade lending limits applied to a single borrower, they also set up multiple special-purpose companies.
The finance industry estimates cumulative lending tied to the scheme at 300 billion won, with about 200 billion won recovered. The final damage is estimated at around 100 billion won. Welcome Savings Bank said the FSS investigation was already completed last year and that the actual losses would be less than 90 billion won.
The FSS is currently conducting an inspection of KB Savings Bank. It also carried out an industrywide review of auto parts receivables-based lending at savings banks and found no additional cases of fraudulent loans, officials said.
Police are continuing to investigate the parts supplier and others suspected of fraud.
* This article has been translated by AI.
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