According to Yonhap News Agency's report on August 24, a major financial incident involving the Chinese branch of South Korea's IBK Enterprise Bank occurred, with a loss exceeding 800 billion Korean won (approximately 389 million RMB). The bank insists that the incident was caused by "external fraud," but some accuse the lax internal control system of the bank contributing to the scale of the loss.
According to information obtained by Sang Dong-suk, a member of the Political Affairs Committee of the Korean National Assembly, from the Financial Supervision Agency and banks on the 24th, SIM JONG HOON, a corporate representative of IBK China Branch, signed an agreement with Non-Bank Financial Institution A to issue non-face-to-face loans to borrowers.
According to the agreement, Company A entrusts Online Loan Platform Company B with the responsibility of recruiting borrowers and managing the collection of principal and interest. The loan funds are provided by a corporate bank. The principal and interest repaid by the borrowers are first collected into the account designated by Company B, and then regularly settled and transferred by the corporate bank.
However, Company B arbitrarily changed the repayment path during its operations. It diverted the repayment funds that should have been transferred to the corporate bank for other purposes, and fabricated electronic transaction data to create the illusion of normal repayment. As the funds were blocked, the borrowers were marked as overdue by the system, resulting in damaged credit records. The corporate bank also failed to recover the loan principal and interest on time.
In response to questions from members of the council, the bank stated that they are constantly checking the details of principal and interest repayments against the actual amounts recorded in their accounts. However, the bank also claimed that it was only on June 24th this year that they realized the problem due to unpaid settlement funds and an increase in complaints from borrowers. This contradicts the previous statements, making the effectiveness of their internal controls highly questionable.
It is worth noting that as early as March and April this year, five Chinese financial institutions successively terminated their business cooperation with Company B. However, the enterprise bank failed to recognize these risk signals in time, missing the opportunity for early warning.
Shin Dong-uk also pointed out that the response of South Korean regulatory authorities was rather passive. According to reports, after receiving the accident report, the Financial Supervision Agency of South Korea only carried out internal reporting, disseminated information about the accident, and confirmed changes in the amount involved in the accident. They did not conduct face-to-face inspections of personnel related to the corporate bank, request additional documents from them, or initiate written investigations and on-site inspections.
The Financial Supervision Authority stated that it plans to review the propriety of the accident handling process after the compensation for losses and other related procedures are completed, once the corporate bank submits its closure report.
Shin Dong-soo said: "While the corporate bank directly provides loans, it leaves the collection of principal and interest to external platforms. It wasn't until a scandal worth 800 billion won occurred that a direct repayment system was established. In addition to lax internal controls by legal entities, the Financial Supervisory Service simply waits for case closure reports. Their subsequent supervision is also a serious issue."
IBK Bank has officially disclosed the financial incident on May 15th this year, with an initial estimate of a total scale of approximately 833.76 billion Korean Won involved. As of now, the bank has not published final figures for the amount involved, recouped funds, and expected losses, as the relevant accounting work is still ongoing.
