2 weeks Ago By [email protected](KoreaTimes)
Headquarters of the country's four major commericial banks — Shinhan, Woori, KB Kookmin and Hana / Courtesy of each bank By Lee Kyung-min KB Financial Group and Shinhan Financial Group submitted their accountability charts to the Financial Supervisory Service, in an industry-wide effort to strengthen internal control, market watchers said Wednesday. Underlying the collective move to bolster compliance is the slew of questionable business practices of their subsidiaries. These include poorly granted loans to figures obedient to group executives, indicating preferential treatment, as well as loans given to customers with intent to commit fraud and those who abuse lax screening processes.
Also rampant was employee embezzlement. The chart defines the major roles and responsibilities of managerial figures , as enforced by the July implementation of a revised law on financial entities’ organizational structures. This will help all employees identify and address issues promptly for immediate redress, a healthy loop of checks and balances that will prevent irregularities proactively, the groups say.
Read More Shinhan, Woori tighten controls amid scrutiny Will ‘accountability charts’ root out embezzlement at banks? KB Financial said the group and its banking subsidiary KB Kookmin Bank submitted the chart before joining a pilot program earlier in the day. The group established a task force dedicated to fortifying internal control, with details outlined in a consulting firm’s recommendation that fully complies with the existing regulations on corporate governance. Also introduced were employee manuals whereby steps of inspections and reporting structures are defined clearly.
“The chart will protect both our employees and customers. We will do our best to establish a framework to gain customer trust,” the group said. Shinhan Financial submitted its chart, Tuesday, the first of the country’s top five financial groups.
The remaining three — Hana, Woori and NH NongHyup — have said they will soon follow suit. Meanwhile, large financial entities will remain unscathed by the revision for the time being, since firms with assets exceeding 5 trillion won ($3.7 billion) are granted a one-year grace period.
A case in point is Shinhan Securities, a beleaguered financial investment subsidiary of Shinhan Financial, at the center of a 130 billion won loss in futures trading around a market freefall on Aug. 5. The securities firm falsely registered swap transactions from August to early this month, allegedly in an attempt to cover up the futures trading.
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