Headquaters of NH NongHyup Bank in Jung District, central Seoul / Courtesy of NH NongHyup Bank

The business practice of NH NongHyup Bank is undergoing continued stringent scrutiny, as evidenced by the prosecution's Thursday raid of the lender, a holding firm and an industrial development firm over preferentially granted loans, market watchers said Friday.

This is the latest in a slew of irregularities involved in the agriculture-oriented firm's questionable lending practices and employee misconduct allegations, which include embezzlement.

Investigators at the Seoul Central District Prosecutor's Office raided the lender's headquarters in Jung District, central Seoul, and the holding firm, located in a property rental business in Yongin, Gyeonggi Province, along with affiliates of the industrial development firm.

The prosecution believes the lender granted up to 4 billion won in preferential loans.

The raid followed allegations that NH NongHyup Bank granted 10 billion won in loans to the holding firm before a full review of loan guarantees by the Korea Credit Guarantee Fund (KCGF), as revealed by the National Assembly audit of the lender in 2023.

According to data submitted by the lender to former Democratic Party of Korea lawmaker Kim Seung-nam, the holding firm was granted 10 billion won without a full KCGF review. The lender also extended 10.8 billion won in loans on collateral that was only valued at 3.2 billion won.

The property rental firm took out 10 billion won guaranteed by the KCGF, with 6 billion won granted mid-review.

Also questionable was the purpose of the guarantees, Kim said.

The lender approved the loan with the goal of supporting the innovation of small and midsize firms, an initiative irrelevant to the rental business.

"The holding firm has no employees and is in the rental business. How does that advance future innovation of key industries? The screening of loan approvals should be strengthened," Kim said during the audit.