Prosecutors sought arrest warrants for two former Tokyo branch mangers of KB Kookmin Bank on bribery charges Wednesday in connection with a slush fund scandal involving the nation’s second largest lender.

They and other workers in Kookmin’s Tokyo operation are alleged to have extended illegal loans worth about 170 billion won ($161 million) to unqualified customers in return for bribes between 2008 and 2012.

Financial authorities and the prosecution suspected the kickbacks were channeled into its Seoul office to create a secret fund, when the banking group was chaired by Euh Yoon-dae, a close confidant of former President Lee Myung-bak.

Prosecutors started the investigation late last month after receiving the Financial Supervisory Service’s reports on the irregularities.

Investigators raided their offices and houses earlier this week and seized the related documents and computer hard disks.

The prosecution also requested court warrants to arrest two businessmen who are believed to have bribed the branch managers in return for the loans.

By Lee Hyun-jeong (rene@heraldcorp.com)