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(5th LD) Bank officials quit en masse over massive data leak

All Headlines 18:29 January 20, 2014

(ATTN: RESTRUCTURE throughout, minor changes)

SEOUL, Jan. 20 (Yonhap) -- Senior executives at a bank and credit card firms tendered their resignations on Monday as the finance industry tried to rein in havoc from the latest massive leak of client data that regulators say may have affected some 20 million people.

Fears that the information fell into the hands of scammers escalated as reports were coming in of suspicious and unintended financial transactions, despite earlier statements by the firms that the culprits of the leak were caught before the information was distributed.

Their resignations came hours after the country's financial regulator warned of stern punitive measures against financial institutions and their chiefs if the latest leak turned out to be a result of their management failure.

Personal data, including bank account numbers, addresses and credit ratings of some 20 million bank clients have been leaked, according to the estimate by the Financial Supervisory Service (FSS). Part of the leak occurred at local banks that shared their customer data with their affiliated credit card firms, such as KB Kookmin, Nonghyup and Lotte. Customers and authorities are most concerned that the information may have gone to financial scammers.

"Their parent firms seem to be taking a step back (from the issue) and not showing any kind of responsible attitude," Gov. Choi Soo-hyun of the FSS was quoted as saying in a meeting with his staff. "We will hold them fully responsible for the data leak if their sharing of client data among affiliates and lax internal control turn out to be the cause."

<YNAPHOTO path='C:/YNA/YNACLI~1/Down/Article/AEN20140120000655320_01_i.jpg' id='' title='' caption='Shin Je-yoon, chairman of the regulatory body Financial Services Commission, bows in apology on Jan. 20, 2014 during a meeting with ruling party legislators for not taking preemptive measures to prevent a massive data leak. (Yonhap) '/>

In December, personal data of some 130,000 customers of Standard Chartered Bank Korea and Citibank Korea were also stolen, the largest number in the history of the banking sector in South Korea.

The revelation caused a stir over the weekend, with angry bank clients logging on to the websites of the card issuers to check whether their confidential data had been stolen.

Cardholders, concerned about possible fraud, have been scurrying to apply for new plastic cards, with more than 150,000 applications received for the three card firms as of noon, higher than the daily average of 30,000 cases.

According to industry sources, some cardholders have already reported a series of unauthorized credit card charges and claimed that they are from the data leak.

But it was not definitively clear whether there is a link, the sources said.

The three card firms said they would fully cover any financial losses suffered by their customers from scams linked to the data leak.

"We will take any legal and moral responsibility for the cases of the personal information leak," they said in a statement.

Hours after their joint press conference earlier in the day, however, the management of KB Financial offered their resignation en masse to take responsibility for the incident. The chief of Nonghyup's credit card business division also tendered his resignation amid mounting criticism that its follow-up measures to the largest-ever data leak are inadequate.

<YNAPHOTO path='C:/YNA/YNACLI~1/Down/Article/AEN20140120000655320_02_i.jpg' id='' title='' caption='Senior executives of three credit card issuers bow their heads in apology for a massive leak of confidential data of clients '/>

Customers filed lawsuits on Monday against the three credit card firms, seeking a total of 110 billion won in compensation.

A consumer advocacy group said it would consider lawsuits, saying the firms should come up with more a reliable and tangible method for compensating their clients.

The Financial Consumer Agency also said it will request the financial watchdog next month to investigate six financial firms -- Standard Chartered Bank Korea, Citibank Korea, Kookmin Bank, NongHyup Bank, KB Kookmin Card and Lotte Card -- on behalf of their customers whose private data were leaked.

Bank clients are arguing that regulatory authorities should have done more to prevent such a large-scale data leak from happening.

The FSS had already been under criticism for its lax supervision of local financial firms. Hundreds of investors are reeling from the losses in their investments in short-term financial instruments issued by Tong Yang Group, who sold the investment products knowing that the company was deeply troubled financially.

The state auditor started auditing the FSS and the Financial Services Commission (FSC), the top regulator, on Monday in a bid to hold them accountable for their lax supervision of Tong Yang Group.



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