Korea's financial watchdog said it has decided to penalize SC First Bank for its violations of local banking laws such as the illegal handling of metal loan services to corporate customers.

The Financial Supervisory Service (FSS) said it will impose fines worth 4.5 million won ($4,225) and punish 41 officials of the Korean unit of Standard Chartered Plc after the bank violated regulations on metal lending and made other irregularities.

Metal lending refers to a financial service in which a bank lends metal to a corporate client and earns commission fees in return. Under the local banking laws, Korean banks are banned from lending metals or raw materials other than golds.

The FSS said it found that SC First Bank pocketed $600,402 in commission by lending platinum and palladium to six corporate clients between 2007 and 2010.

The penalty would serve as a setback for SC First Bank, which has already been plagued by a labor strike. Unionized workers at the bank launched an indefinite strike on June 27 in protest against the management's move to introduce a performance-based pay system. (Yonhap News)