Four Savings Banks To Be Investigated

The prosecution said Thursday it will launch an investigation into savings banks subject to business suspension as early as next week. Now, up to four savings banks are expected to face administrative measures imposed by the Financial Supervisory Service (FSS), prompting concerns over another bank run, The Korea Times reported. “Basically, we will launch a probe at the request of the financial regulator after they announce the list of savings banks for business suspension,” a prosecutor said. “But they haven’t yet requested us to launch a probe.” Depending on the probe results, the savings banks that will face business suspension will then face judicial punishment for alleged illegalities as well as administrative measures from the FSS. The FSS will suspend business operations at savings banks at the end of this week, after its internal audit of savings banks. But the FSS refuted some media reports that they have already requested the prosecution to launch a probe into savings banks. In September 2011, the FSS ordered the four banks to improve their business and stabilize their financial health. The regulator has since conducted an audit to see whether they were involved in any irregularities such as embezzlement and illegal loans. The investigation is expected to deal a fatal blow to the four and their account holders. Their assets are estimated at 10 trillion won with over 1 million account holders, many of whom are expected to rush to bank branches to withdraw their deposits. Read more.