SEOUL, January 10 (AJP) - The Financial Supervisory Service has launched an investigation into the state-owned Industrial Bank of Korea (IBK) following allegations of illegal loan approvals totaling some 24 billion won (approximately $180 million).
The probe, which began earlier this month, comes after IBK disclosed that the loans, approved between June 2022 and November 2024, involved inflated real estate collateral values and improper loan approvals at its branch in Seoul.
Initial findings suggest that both current and former IBK employees were involved in the scheme. A former employee, now working in the real estate business, is believed to have used personal ties with the branch to orchestrate the fraudulent transactions.
The FSS is focusing on how the scheme evaded detection for over two years and is evaluating IBK’s internal controls. Regulators are also examining broader systemic vulnerabilities in South Korea’s state-run financial institutions.
IBK has pledged full cooperation with the investigation and has vowed to enhance oversight mechanisms to prevent future incidents. “We take this matter seriously and will ensure that necessary measures are implemented,” a bank official said.
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