Korea’s financial watchdog plans to probe into a Kazakhstani bank acquired by Kookmin Bank, which currently suffers from huge losses.
According to financial industry sources, the Financial Supervisory Service (FSS) plans to send two high-level executives to Kazakhstan next month to discuss the operational status of the Kazakhstani Bank CenterCredit (BCC). The visit reportedly comes in response to a request made by the Kazakhstani financial authority.
Kookmin Bank purchased a 41.9 percent stake of the Kazakhstani bank for 940 billion won (US$883.8 million) in 2008, which has brought losses of a maximum 900 billion won (US$847.6 million) to Kookmin Bank since then. Kookmin Bank is currently the second-largest stockholder of BCC.
“Kookmin Bank already received disciplinary measures in 2010 from Korean financial authorities on losses from the BCC,” said a financial official, adding, “Due to additional signs of risks from the bank, the FSS plans to send executives to take a deeper look into the case with local officials.”
Market watchers said Kookmin Bank had not taken any visible actions on the Kazakhstani bank, with the Korean bank’s negligence furthering risks in BCC.
“There are rumors that the Korean banks’ overseas branches are seeking to commit accounting fraud here to avoid financial regulations from home,” a Kazakhstani financial official said.
Last week, South Korea’s financial watchdog also started a probe into suspicions that Kookmin Bank’s Tokyo branch has been involved in running secretive funds for the bank’s management. The FSS reportedly found some evidence that the branch manager pocketed large sums of fees from approving loans off the books.
Japan’s Financial Services Agency has also notified its Korean counterpart FSS of such irregularities. The FSS has been known to look into them.