At Welcome Savings Bank, the industry's No. 4, a loan fraud worth hundreds of billions of won, backed by accounts receivable from auto parts, has been uncovered. As the Financial Supervisory Service launched an on-site inspection, a full survey for similar cases also began.
According to financial authorities and the banking sector on the 29th, Welcome Savings Bank realized late last year that a 90 billion won loan fraud based on accounts receivable from auto parts had occurred and voluntarily reported it to the Financial Supervisory Service.
The incident centered on auto parts companies and others. When a parts company issues an estimate for parts repair costs through the Korea Insurance Development Institute's repair cost estimate system (AOS), savings banks execute a securitized loan "based on accounts receivable" on that basis, but some parts companies are said to have fabricated estimates to obtain loans.
Welcome Savings Bank is known to have handled about 300 billion won in securitized loans over several years to body shops and others, including the parts companies in question. Of that, 200 billion won has already been recovered, and the remaining roughly 90 billion won was deemed a potential loss asset and fully set aside as a provision.
Welcome Savings Bank immediately suspended all related loan originations upon recognizing the incident. Work is underway to identify suspected fraudulent loans within the 90 billion won. A Welcome Savings Bank official said the scale of damage has not yet been determined and will likely be far smaller in reality.
The Financial Supervisory Service began an on-site inspection immediately after receiving the report and reportedly launched a comprehensive review at other savings banks to check for similar cases.