November 17, 2011 / 6:22 AM / 7 years ago

Woori, Shinhan battle for troubled Tomato Savings Bank

SEOUL (Reuters) - South Korea’s debt-ridden Tomato Savings Bank may find a new owner with Shinhan Financial Group Co Ltd (055550.KS) and Woori Finance Holdings Co Ltd 053000.KS vying for the suspended institution, which has suffered irate customers, investigations and now an executive’s suicide.

South Korea has temporarily closed 16 savings banks so far this year, including major players Jeil and Tomato Savings Bank as the sector grapples with deteriorating asset quality due to bad construction loans. Some have already reopened after successful auctions.

Officials at Korea’s two big financial groups Shinhan and Woori said they would advance to the final round of bidding due on Thursday, and expected a preferred bidder for Tomato to be picked next week.

Although savings banks only account for only 2.8 percent of the overall financial industry, their debt debacle outraged thousands of depositors and led to a wider crackdown on corruption in the sector.

Amid a probe a senior Tomato executive hung himself on Thursday, following the suicide of the chief executive of another closed savings bank in September, according to an official with a joint investigation team led by the Supreme Prosecutors’ Office.

The country’s prosecution has set up a special team of investigators to probe mismanagement and allegations of corruption at the suspended savings banks.

A corruption scandal at Busan Savings Bank earlier this year claimed some of Lee’s closest aides as the investigation of a lobbyist’s alleged illegal payoffs to top government officials expanded.

Reporting by Ju-min Park; Editing by Chris Lewis and Jonathan Hopfner

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