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SC Bank reels from penalties
Bank hit by tax probe and allegations of squeezing smaller firms
By Chung Joo-wonPublished : Feb. 24, 2013 - 19:44
Standard Chartered Bank Korea, the Korean operation of London-based Standard Chartered that spans more than 70 countries worldwide, has been struck by not one, but a series of blows by the nation’s financial authorities.
The three state regulators ― the Financial Supervisory Service, the National Tax Service and the Financial Services Commission ― took turns squeezing the British Bank.
On Friday, the FSC finalized its decision to impose a 17 million won ($16,000) fine on the bank for offering and signing up to 566 unauthorized loan agreements with small and medium companies, which altogether amount to some 8.4 trillion won ($7.7 billion).
The authorities also issued a legal warning against the bank president Richard Hill and reprimanded other executives.
According to the watchdog, the agreements signed by SC Bank were “unfair,” and were “typical tricks from foreign banks aimed at snatching the umbrella away from companies on rainy days.”
A bank spokesperson said, “Whether Standard Chartered Bank violated consumers’ rights was the major issue here.”
The contracts are called uncommitted facility agreements, and are a form of loan agreement between a bank and a company to provide an unspecified amount in loans on demand from the borrower.
The contracts lack binding terms for the banks, meaning they can collect the loans at any unspecified time, reduce the amount of the loans or cancel altogether.
Also last week, the National Tax Service launched a tax investigation into the bank in its first regular probe by the tax authorities since April 2009.
The bank formally denied possibilities that public criticism regarding its past disputes would influence the probe’s intensity. However, it implicated a possible clash with authorities, should the probe results turn out unacceptable.
“We may have things to say if certain clashing issues are in fact visualized after the investigation is finished. But, at this point, we do not have much to say,” an SC Bank Korea spokesperson told The Korea Herald.
The British bank was also grilled by the Financial Supervisory Service for high, untaxed dividends.
By Chung Joo-won (joowonc@heraldcorp.com)
The three state regulators ― the Financial Supervisory Service, the National Tax Service and the Financial Services Commission ― took turns squeezing the British Bank.
On Friday, the FSC finalized its decision to impose a 17 million won ($16,000) fine on the bank for offering and signing up to 566 unauthorized loan agreements with small and medium companies, which altogether amount to some 8.4 trillion won ($7.7 billion).
The authorities also issued a legal warning against the bank president Richard Hill and reprimanded other executives.
According to the watchdog, the agreements signed by SC Bank were “unfair,” and were “typical tricks from foreign banks aimed at snatching the umbrella away from companies on rainy days.”
A bank spokesperson said, “Whether Standard Chartered Bank violated consumers’ rights was the major issue here.”
The contracts are called uncommitted facility agreements, and are a form of loan agreement between a bank and a company to provide an unspecified amount in loans on demand from the borrower.
The contracts lack binding terms for the banks, meaning they can collect the loans at any unspecified time, reduce the amount of the loans or cancel altogether.
Also last week, the National Tax Service launched a tax investigation into the bank in its first regular probe by the tax authorities since April 2009.
The bank formally denied possibilities that public criticism regarding its past disputes would influence the probe’s intensity. However, it implicated a possible clash with authorities, should the probe results turn out unacceptable.
“We may have things to say if certain clashing issues are in fact visualized after the investigation is finished. But, at this point, we do not have much to say,” an SC Bank Korea spokesperson told The Korea Herald.
The British bank was also grilled by the Financial Supervisory Service for high, untaxed dividends.
By Chung Joo-won (joowonc@heraldcorp.com)
