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Industrial Bank of Korea

Industrial Bank of Korea

Industry: 
Banking
Symbol: 
SEO:024110
Country: 
South Korea
Sources: 

“South Korea is set to become the second Asian nation to make a payment to Iran for crude oil imports under an interim nuclear deal…Japan became the first of Iran's oil buyers to make a payment to Iran under the eased sanctions earlier this month. It was not clear the amount to be transferred but the Iranian central bank was holding up to $5.6 billion in two won-denominated accounts, one at Woori Bank and the other at Industrial Bank of Korea as of late 2013, according to one of the sources. A second source who confirmed the money transfer added the payment would be made by the two Korean banks next month - one part on early March and the other later in the month…State-owned Woori Bank and Industrial Bank of Korea declined to comment on the money transfer…Bank of Korea and South Korean finance ministry officials contacted by Reuters said no decision had been made about money transfers to Iran.” (Reuters, “South Korea set to make oil payment to Iran - sources,” 2/12/14)

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“Under penalty of expulsion from the U.S. banking system, Iranian crude customers such as China, Japan and India will be restricted to using their own currencies for the purchases, starting today. Importers will be compelled to keep the payments in escrow accounts that Iran can use only for locally sourced goods and services, in what will amount to barter arrangements…The new blockage on remittances will add to financial restrictions the U.S. imposed last year that curtail Iran’s access to dollars, euros and other hard currencies. Sanctions have already forced it into barter arrangements with China, its largest oil customer…South Korean buyers have been paying for Iranian crude in local won, through two accounts that Iran’s central bank opened in 2010 at the Industrial Bank of Korea and Woori Bank…South Korea’s exports to Iran of goods such as iron, steel and petrochemicals increased 3.2 percent to $6.3 billion last year, while imports dropped 25 percent, to $8.5 billion, according to customs data. Oil made up 99 percent of the goods that Japan and South Korea imported from Iran.” (Bloomberg, “Iran Faces Oil-Cash Squeeze as U.S. Bolsters Sanctions,” 2/6/14)

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"South Korean prosecutors have detained and charged a Korean American with the illegal transfer of a staggering 1.09 trillion won ($1.02 billion) in Iranian money frozen in South Korea under international sanctions, the lawyers said on Friday. The Seoul Central District Prosecutors' Office said a 73-year-old man, identified only by his family name, Chung, was suspected of making fraudulent transfers in 2011 from the Iranian central bank's won-denominated account at a South Korean bank by using fake invoices for payment. Prosecutors marveled at the scale of the withdrawals, indicating they believed there had to be more than one person involved. The prosecutors' office said those involved took advantage of a banking procedure that was now more tightly supervised... The prosecutors' office and the Industrial Bank of Korea (IBK) confirmed media reports that identified the state-owned lender as the financial institution that held the Iranian central bank account. IBK had received a payment order from the Iranian central bank, the bank and prosecutors said. It believed the order to be authentic because Chung had attached authorization from the Bank of Korea and a government agency that tracks exports of goods to countries under international sanctions, the prosecution said." (Reuters, "South Korea reveals staggering $1 billion transfer fraud in Iranian money," 1/25/13)

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"In response, Rabobank and Société Générale say they have stopped servicing Iran deals or curbed their trade finance. According to Iranian trade professionals, Korea's Woori Bank and Industrial Bank of Korea have done the same. The Korean banks could not be reached for comment." (The Wall Street Journal, "Willing Banks Find Profits in Legal Trade With Iran," 4/8/2012)

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Industrial Bank of Korea is one of South Korea's largest banks. It is a publicly-owned institution specializing in loans for small and medium-sized corporations. IBK is also involved in consumer banking, investment banking, and asset management (Google Finance).

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In October of 2010, the South Korean government appointed IBK to "finance commerce with Iran and revive business ties damaged by sanctions." The deal allows the Iranian central bank to deposit proceeds from oil sales at IBK, which will use the funds to pay South Korean firms exporting to Iran. South Korean trade with Iran amounts to $10 billion annually (Financial Times).