September 23, 2011
SEOUL (AFP) - The head of a major South Korean savings bank was found dead Friday in an apparent suicide after investigators raided his office as part of a probe into illegal dealings at several banks, police said.
Jeong Gu-Haeng, president of Seoul's Jeil 2 Savings Bank, appeared to have jumped from his office on the sixth floor of the bank's Seoul headquarters, a police officer told AFP.
"It is true that he jumped to his death," the officer said, adding the scene had been sealed off. Television footage showed investigators covering Jeong's body with a piece of white cloth.
The apparent suicide followed a raid by prosecutors, police and bank regulators of seven savings banks including Jeil, in connection with possible irregularities by their executives and major shareholders.
"We are focusing on confiscating materials on excessive loan extensions, improper lending to shareholders and unhealthy loans, which the banks were accused of issuing," an unnamed investigator told Yonhap news agency.
Prosecutors seized accounting books, transaction statements and computer hard disks, it said.
Financial regulators at the weekend suspended the seven banks for six months because of their poor financial condition caused by reckless investment in risky property projects.
The move came after a stress test revealed capital shortages and deposit losses at some mutual savings banks, which lured customers with high interest rates and offered loans to those unable to borrow from major lenders.
So far this year 16 savings banks have been suspended for inadequate liquidity after financing of soured real-estate projects swelled bad loans.
Busan, the country's largest savings bank, was suspended earlier this year, sparking public anger after claims that wealthy clients were tipped off in advance about its shutdown so they could withdraw their cash.
Prosecutors later charged Busan's owner, family members and executives with embezzlement and fraud.
The suspensions of the latest seven banks affected roughly 640,000 customers who hold deposits of 11.3 trillion won ($9.45 billion).
"Severe punishment is required for illegal activities by managements and major shareholders," Financial Supervisory Commission chief Kim Seok-Dong said Thursday.
He promised to honour a guarantee of repayment of up to 50 million won for each account-holder. Authorities opened a website where deposit holders can apply for such payments over the next two months.
But customers rushed to retrieve their deposits Thursday, the first day they became available. Regulators said withdrawals decreased Friday as investor jitters calmed.
