|Financial Supervisory Service (FSS) headquarters on Yeouido, Seoul / Courtesy of FSS|
Woori fined for largest no. of cases, Hana fined the largest amount by foreign authorities
By Anna J. Park
Major local banks' overseas legal entities were sanctioned or fined by foreign financial authorities for various reasons last year, raising concerns about whether the banks are successfully maintaining internal controls in their overseas operations.
According to the electronic disclosure system of the Financial Supervisory Service (FSS), Wednesday, among local banks, Woori Bank turned out to have been fined by foreign authorities the most times last year. The bank was fined a total of six times: twice each in China and Indonesia, and once each in Russia and India.
Indonesia's financial authorities imposed a penalty of 60 million rupiah ($4,017) on Bank Woori Saudara, Woori Bank's Indonesian unit, for errors found in its regular reports in January last year. The Indonesian bank unit was also fined 4 million rupiah for delaying a disclosure about a capital increase in March last year.
Woori Bank's Chinese branch was also penalized 200,000 yuan ($29,547) by the country's foreign currency authorities for errors in its balance and statistics reports. Beijing's banking supervisory also imposed a fine of 900,000 yuan on the bank for not confirming the purposes of the loans.
In Russia, Woori Bank's operation there was fined 1 million rubles ($14,504) by the Russian central bank for violating foreign currency positions in July. In India, the bank was fined 5.9 million rupees ($72,217) for applying lower interest rates than those officially promised to savings deposits.
Hana Bank, meanwhile, received the largest penalty last year among the local banks. The bank's legal entity in China was fined 15.7 million yuan for its insufficient guarantee of foreign currency payments last September.
KB Kookmin Bank's branch in Vietnam was also fined 160 million dong ($6,831) by the country's central bank last May for omitting the confirmation of its financial authorities with regard to remittances.
As these banks have a history of receiving various penalties from local financial authorities for the lack of internal controls or the mis-selling of problematic fund products, market watchers are showing concern that such penalty sanctions might reflect the banks' failure to control their overseas operations safely.
As of the end of June 2022, a total of 478 branches of Korean financial companies were operating in 44 countries.