South Korea suspends 4 savings banks

Seoul – South Korea’s financial watchdog on Sunday suspended four savings banks for six months because they failed to meet financial-strength standards.

The four are Solomon, Mirae, Hanju and Korea Savings Bank, the Financial Services Commission said, amid moves to tighten the banking industry in South Korea.

They were ordered to appoint new managers and improve their finances within 45 days. They will be put on sale if they fail to do so.

Last year, the watchdog suspended 16 savings banks found to be in difficulty, mainly due to reckless investments in risky property projects.

Financial regulators have launched an extensive probe into irregularities by savings banks since Busan, the country’s largest savings bank, was suspended in early 2011.

In February, Busan’s eight executives received jail terms of up to 14 years for offences including a lobbying operation aimed at keeping the bank open and $5.3 billion of illegal lending.

Busan was found to have lobbied politicians and government officials to avoid having its operations suspended.

Prosecutors have questioned thousands of people and dozens of government officials, bank executives and others have been charged with corruption. Three bankers have committed suicide.