3-Day Penalty for Hanover's Seoul Unit
SEOUL, South Korea -- The Seoul branch of Manufacturers Hanover Trust Co. was ordered to suspend foreign exchange business for three days as a penalty for violating South Korean rules, the finance ministry said.
A ministry official told the Associated Press that the Hanover branch must begin its suspension order on Monday. The branch brought in foreign capital without approval from relevant authorities, the official said.
Business Closely Monitored
It was the second time the Korean government had imposed business suspensions against foreign banks.
The Seoul branch of French Banque Indosuez was ordered to suspend its foreign exchange business for one week last month. The government said the bank had brought in $85 million through the same illegal method the Hanover branch used.
The Korean government tightly controls the introduction of foreign capital, fearing its inflationary pressure on domestic prices.
Domestic Distortion Claimed
Kang Man-Soo, director general of the ministry's international finance bureau, said Manufacturers Hanover recently brought in $25 million through illegal foreign exchange transactions via its sister branches in Hong Kong and Tokyo to make loans to local corporations.
"The bank's branch violated local foreign exchange rules and distorted domestic money and credit order," the ministry said.
Ministry officials said no other foreign branches were found to have violated the rules in a similar way.