The number of institutional sanctions imposed by the Financial Supervisory Service (FSS) on banks has nearly tripled over the past year. During the same period, the number of banks that received sanctions increased by more than double. This has been interpreted as evidence of the FSS's reinforced supervisory and inspection stance since the appointment of Governor Lee Bok-hyeon.
According to the FSS on the 8th, the number of institutional sanctions announced by the FSS against banks during the last year was 48. Of these, the number of high-intensity sanctions, including penalty surcharges and fines, was 31, with the total amount of fines being 6.2 billion won. The number of banks that received sanctions was 17.
Institutional sanctions refer to post-sanctions imposed by the FSS when violations of laws or supervisory regulations are discovered during the inspection process of financial institutions. Sanctions range from lighter measures such as warnings and cautions to heavier penalties including partial business suspensions and imposition of penalty surcharges and fines.
The FSS's sanctions against banks have significantly increased compared to 2023. The number of sanctioned banks rose from 7 to 17, more than doubling. The total number of sanctions increased from 17 to 48, and the number of penalty surcharges and fines rose from 11 to 31, nearly tripling in each case. The amount of penalty surcharges and fines also surged from 1 billion won to 6.2 billion won.
The number of sanctions last year also increased compared to the statistics from 2022. In 2022, 7 banks received 20 sanctions. Among these, there were 11 cases of penalty surcharges and fines. However, the fines during this period were considerable at around 21 billion won, as the FSS uncovered banks' misconduct related to the Lime incident and issued fines of several billion won to five banks.
The increase in bank sanctions last year is attributed to the enhanced supervisory and inspection policies of the FSS following the appointment of Governor Lee. Given that he has been known as a prominent figure in investigating economic and financial crimes since his time in the prosecution, it is interpreted that he would have influenced the FSS's activities. The FSS typically announces the final inspection results on its website one to two years after the end of inspections. Considering that Governor Lee took office in June 2022, the sanctions announced last year were the results of inspections that began earnestly after his appointment.
Earlier in 2023, the FSS announced improvement measures for the regular inspection process of financial holding companies and banks and strengthened collaboration among departments during bank inspections. Last year, when the unfair loan case involving former Woori Bank Chairman Son Tae-seung came to light, the FSS conducted rigorous inspections for nearly six months, including on-site inspections for unfair loans, regular inspections of Woori Bank, and extending regular inspections twice. Additionally, during a board meeting in November last year, Lee directly urged, "The FSS must continue to strengthen its supervisory and inspection capabilities," emphasizing the importance of inspection work even in recent times.
Moreover, opinions have emerged that banks have been paying more attention to their internal control operations due to the intensified inspections by the FSS. A representative from a commercial bank noted, "The FSS has responded strongly every time incidents of embezzlement and breach of trust occur since the appointment of Governor Lee," adding, "Financial institutions are tightening internal controls and reporting financial incidents more promptly compared to before, reflecting noticeable changes."