Luxury-car Loans Bankrupt S. Korea Bank

Featured - July 5th, 2012
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Several luxury cars were put on sale after a South Korean bank declared bankruptcy over illegal loans, Wall Street Journal reports.

Gangwon Domin Savings Bank took out loans for the cars but they were repossessed when they couldn’t be repaid, prompting the bank to declare bankruptcy. Park Shin-woong, the agency’s bankruptcy administrator told the Journal, “There are many reasons behind the bank’s bankruptcy, but one thing that stands out among other troubled savings bank is the CEO’s arbitrary execution of loan provision against those supercars”.

Chae Kyu-chul, CEO, was sentenced to seven years in prison and charged with breach of duty and providing illegal loans. Mr. Park added that the bank’s loan management “was worse than that of a pawn shop”.

Among the cars seized by the Korea Deposit Insurance Corporation from the bank were a Lamborghini Murcielago LP640, a Porsche Carrera S, a Benz E350, a Ferrari 612, a Dodge Magnum, a French Buggati Vevron and cars from Swedish maker Koenigsegg. The cars will be auctioned this month while proceeds will be used to compensate depositors of the now-defunct bank.

According to the Journal, 13 savings banks have been shut down due to weak financial standing since earlier last year.