(Photo= Yonhap news)

[Alpha Biz= Reporter Kim Jisun] The Financial Supervisory Service (FSS) plans to conduct a review of banks' governance improvements and enhance loan systems at branch offices in the second half of the year to prevent recurring financial incidents.

On the 12th in Seoul's Myeongdong Bank Association Building, Deputy Director Lee Jun-soo of the Banking and Small Business Financial Bureau presided over a meeting with chairpersons from 18 banks including KB, Shinhan, Hana, Woori, and Nonghyup. The FSS announced that after publishing exemplary practices for bank governance structures in December last year, it received implementation plans from each bank in the first quarter.

The FSS assessed that there are many deficiencies in the governance improvement plans submitted by the banks. Deputy Director Lee emphasized, "There are many areas that need to be supplemented, such as some items having overly delayed implementation schedules or lacking specificity," and stressed the need to establish early standards for CEO appointments, procedures for appointing outside directors according to best practices, and criteria for board composition and evaluation.

The FSS plans to closely examine efforts to improve bank governance through regular inspections and management evaluations starting in the second half of the year.

Additionally, there will be significant enhancements to the loan operation systems at bank branches. This decision comes in light of recent financial incidents such as embezzlement and fraud occurring at various banks. The FSS diagnosis highlights vulnerabilities introduced as loan procedures have transitioned significantly to digital methods. It points out gaps such as the lack of verification procedures for original proof documents like income and employment records, and insufficient checks on whether lease agreements for real estate collateral loans were actually executed.

 

 

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