Korean Savings Bank Chief Leaps to Death as Regulators Probe Irregularities

The chief of a South Korean bank who was being investigated by regulators has apparently committed suicide by jumping out of his sixth-floor office in Seoul onto the pavement while customers waited in line outside.

According to Korean police, Chung Ku-haeng, the boss of Jeil-2 savings bank, did not leave a suicide note.

The bank’s operations were suspended last Saturday by the government due to suspected irregularities. Bank offices were also raided by investigators seeking evidence of financial malpractice in connection with high-risk real estate transactions.

One bank investigator told local media: “We are focusing on confiscating materials on excessive loan extensions, improper lending to shareholders and unhealthy loans, which the banks were accused of issuing.”

Bank customers were rushing to remove their deposits from the bank. By Korean law, depositors are covered by national deposit insurance for about $40,000.

According to Britain’s Daily Mail newspaper, one witness to the suicide leap, said: “It was so frightening. I didn't know at the time it was the bank chief.”

Jeil-2 is not the only Korean bank in trouble.

In July, bank regulators began a probe into the savings bank industry, amidst a weak property market that has led to a sharp increase in construction loan defaults

Earlier in the week, the government suspended seven other savings banks in the country – including Tomato Savings, the country's second-largest savings bank -- due to their fragile finances.

Earlier in the year, Seoul suspended nine other banks for similar reasons.

Reportedly, the affected banks had capital-adequacy ratios of less than 1 percent, far below the regulatory limit of 5 percent.

"If managements fail to raise the ratios above 5 percent within the next 45 days, the banks will be put up for sale to a third party," warned Kim Seok-Dong, chairman of the Financial Services Commission (FSC), the national regulator.

The FSC added that banks which have a ratio of more than 5 percent can seek government funds to increase their capital levels.