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SEOUL: South Korea's Shinhan Bank said Thursday it has asked prosecutors to investigate its former chief for alleged embezzlement and breach of trust, amid suspicions about loans worth tens of millions of dollars.
Shinhan said in a statement it was suspicious about 95 billion won (80.4 million dollars) in loans to relatives of Shin Sang-Hoon, the current president of parent group Shinhan Financial.
The bank said it also has suspicions about 1.5 billion won that may have been embezzled.
Shin, 62, headed the bank from 2003 to 2009 before moving to Shinhan Financial, the country's third-largest financial services firm by assets.
The bank said it launched investigations after receiving complaints and was also asking prosecutors to investigate six other employees.
It said the parent group would soon hold a board meeting to take steps to fire Shin.
"We sued the former chief and employees based on the belief that we need to demonstrate efforts to voluntarily root out corruption and reform ourselves," Shinhan said in the statement.
"We deeply apologise for disappointing our customers and shareholders."
Board members will hear Shin's arguments at an upcoming meeting, a spokesman for the group told AFP, adding he does not want to comment.
"CEOs of the group subsidiaries will also meet soon to discuss the issue," he said. Dates for both meetings have not yet been set.
Shinhan Bank, with assets totalling 240 trillion won at the end of June, has been competing with Woori Bank for second place behind the country's largest lender Kookmin Bank.
Shinhan Financial Group reported a net profit of 588.6 billion won in the second quarter of this year.
Shinhan Financial shares ended down 4.87 percent at 43,950 won.
"The news probably hits more at investor sentiment, though we'll have to see whether there's any impact on the firm's earnings," SK Securities analyst Bae Jung-Hyun told Dow Jones Newswires.
"This probably affects sentiment more because it's Shinhan Financial, given how (it) has been seen as a clean company."
Shinhan has been considered among the best-run of the four major financial holding companies listed in South Korea, and has been the most profitable among them in recent quarters.
"This hurts image-wise," said Eugene Investment and Securities analyst Kim In said, adding that the news would not have a big impact on the firm's operations. - AFP/fa
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