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| Korean Banking System |
58 year-old Kim, chairman of the Mirage Savings Bank, was detained at the small port of Gungpyeong on the west coast, about 55 kilometers southwest of Seoul, while attempting to leave for China by boat with 20.3 billion won ($17.9 million) of the suspended bank's funds, which he walked out of the bank with on Thursday - apparently without anyone noticing.
The incident appears to lend even more weight to the old adage that the best way to rob a bank is to become a banker, although most bankers today choose to steal funds electronically through elaborate bonus schemes, rather than by physically walking out of their bank with the cash. Witnesses say Chairman Kim's attempt to escape Korea immediately hit trouble when the boat began taking on water due to the weight of the banker's luggage.
The government assured savers that South Korea's banks were perfectly safe at the beginning of 2011, shortly before several of them were found to be trading "without sufficient capital", as officials from the Ministry of Factual Economy characterized it, and "while bankrupt" as financial analysts explained it. It proved to be a severe embarrassment to the government, which prior to the collapse had accused international credit ratings agencies of being involved in an anti-Korean conspiracy after they had assigned poor ratings to the country 'due to over-lending in the financial sector'.
Following the debacle, the Ministry of Finance embarked on a series of stress tests which involved sending a 55 year-old Korean housewife into various banks claiming her account was wrong. Officials later announced that although two bank tellers had later committed suicide, all the banks had passed the test. Several senior bankers also committed suicide around this time, but the authorities said it was not directly connected to the stress tests.
The anti-Korean rating agencies were unmoved by the results of the tests, which led to the creation of a more trustworthy independent Korean credit rating agency, called NICE. NICE immediately evaluated the Korean economy and announced that in fact South Korea was the most credit-worthy nation in the world, which is what everyone in Korea knew all along.
To further prove the robustness of South Korea's banking system, the government shut down 16 savings banks and restructured 85 others to make them even safer than they already were, which was very safe.
Last week, days before four more banks - including Mirage - were suspended, the government asked the S&P rating agency to raise its credit rating on South Korea, citing the healthy financial status of Korean public corporations and local authorities. It is now believed however that the reason why they appeared so healthy was due to over-lending to them by savings banks, and there are fears if the money has to be paid back Korean public corporations and local authorities will lack sufficient capital again.
Before the latest round of bank failures, there were high hopes that Korea would win gold in the 4x100 meter relay at the London Olympics this year, after submitting a team comprised entirely of savings bank chairmen, but the government has now been forced to impose a travel ban on them.
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