Woori Bank Searched by South Korea Police Over Construction Loan

Woori Bank (053000), a unit of South Korea’s biggest financial group by assets, was searched by police today in an investigation involving two employees.

National Police Agency officers visited Woori Bank’s headquarters in Seoul and took documents related to 2006 lending for a resort project, Woori Bank spokesman Han Seoung Chul said by phone, without identifying the employees. The search was about individual corruption and the bank didn’t find irregular practices in the 2006 lending, the spokesman said.

Korean prosecutors indicted more than 100 people last year after investigating savings banks that made loans for construction projects which soured amid a real estate slump. Lenders including Woori have had to set aside higher provisions against such projects since the 2008 financial crisis.

“I don’t think this one-time case of corruption by individuals will affect Woori’s earnings or hurt investors’ sentiment,” Hwang Seok Kyu, an analyst at Kyobo Securities Co. (030610), said by phone in Seoul.

Five calls to the National Police Agency in Seoul went unanswered.

Yonhap News reported earlier that police were investigating whether the employees received bribes for lending about 135 billion won ($120 million).

Shares of Woori Finance Holdings Co., the bank’s parent company, rose 2.3 percent to 13,300 won in Seoul today, outperforming a 0.1 percent decline in the benchmark Kospi stock index.

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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