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Watchdog chief calls on banks to tighten internal control, risk management

February 19, 2025

The head of South Korea’s financial watchdog called on local banks Wednesday to enhance their internal control system and risk management.

In a meeting with the heads of local lenders, Lee Bok-hyun, governor of the Financial Supervisory Service (FSS), stressed that banks should prevent the recurrences of financial accidents by tightening their internal control.

The FSS said earlier Woori Bank, KB and NH Nonghyup had extended inappropriate loans worth a combined total of some 387 billion won (US$264 million).

Of them, Woori Bank was found to have extended shady loans worth 233 billion won, 70 billion won of which was extended to relatives of an ex-chairman of its parent firm, according to the watchdog.

“Banks should set up an effective internal control system and also beef up their IT-related risks,” Lee said.

The FSS chief added the banks are also urged to enhance their management of risks against what he called “lopsided” asset allocations.

“Over the mid-and-long haul, banks need to strictly manage risks related to assets and financial products,” he said.

Lee Bok-hyun, governor of the Financial Supervisory Service (FSS), speaks during a press conference on his agency's inspection of the banking sector at the FSS' headquarters in Seoul on Feb. 4, 2025. (Yonhap)
Lee Bok-hyun, governor of the Financial Supervisory Service (FSS), speaks during a press conference on his agency’s inspection of the banking sector at the FSS’ headquarters in Seoul on Feb. 4, 2025. (Yonhap)