Woori Bank penalized last year for loan losses: sources

SEOUL, Feb. 1 (Yonhap) -- Woori Bank, South Korea's second-largest lender, was
slapped with a penalty by the nation's financial regulator last year for
loss-making loans extended to a construction project in China, financial sources
said Monday.

According to the sources, Woori Bank and two brokerages -- Daewoo Securities Co.
and Bookook Securities Co. -- had lent a combined 35.7 billion won (US$30.4
million) in 2006 to finance projects by a Korean developer who was building a
27-story commercial and residential complex in the coastal city of Qingdao.
Owing to the global financial crisis in 2008, however, construction work on the
project was halted and the lenders fell short of collecting 26.5 billion won of
the total provided to the builder.
Holding Woori Bank officials responsible for failing to conduct due diligence on
the loan, the Financial Supervisory Service (FSS) last year slapped Woori Bank
with an administrative dismissal, the sources said. While the penalty does not
call for the dismissal to take effect, a note of the incident will go on the
personal record of those implicated.
The financial watchdog also plans to look into Daewoo Securities and Bookook
Securities sometime this year to see if the brokers also neglected to conduct due
risk assessments in making loans to the developer.
"FSS will mull punishing those in charge at Daewoo Securities and Bookook
Securities if they are found to have made problematic loans," an FSS official
said.
pbr@yna.co.kr
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