The prosecution on Tuesday vowed to conduct a joint investigation with related state agencies such as the nation’s top financial regulator and the Korea Deposit Insurance Corporation into corruption at mutual savings banks, signaling a tougher crackdown on bribery scandals ahead of major elections.

The Financial Supervisory Service suspended the operation of seven mutual savings banks last Friday, in addition to the nine suspended and shut down earlier this year.

“The suspension of another seven mutual savings banks … indicates a serious moral hazard,” Prosecutor General Han Sang-dae said in a meeting of 47 senior prosecutors representing 26 prosecutors’ offices nationwide.

“(The prosecution) will root out injustice and irregularities rampant in financial circles.”

In the first national-level meeting of prosecutors since Han took office last month, the chief prosecutor pledged to spare no resources in scraping out corruption at mutual savings banks.

Han also ordered senior prosecutors to focus on investigation of illegal political funding ahead of the by-elections next month and the general elections in April.

The combined assets of the seven mutual savings banks suspended last Friday amount to 11.54 trillion won, close to that of eight of the second-tier lenders that were suspended in January and February ― 12.66 trillion won.

Prosecutors in Seoul, Busan, Gwangju and Chuncheon have investigated the suspended banks for the past six months, with nearly 100 people having been indicted so far.

Five banks affiliated to Busan Mutual Savings Bank were found to have dished out 4.6 trillion won in illegal loans, overstated earnings by a total of 3.35 trillion won and made illicit transactions worth 197.4 billion won.

Prosecutorial investigation into the banks suspended last week may have greater political and social impact as they are mostly based in the Seoul metropolitan area, observers said.

The FSS has already found that the seven lenders gave out hundreds of billions of won in illegal loans to businesses run by their largest shareholders and used accounts under borrowed names for illegal operations.

The prosecution is set to look into possible negligence of duty by financial regulators and political lobbying aimed at keeping the second-tier lenders’ illegal acts in the dark.

By Kim So-hyun (sophie@heraldcorp.com)