South Korea's financial watchdog on Sunday suspended four savings banks for six months because they failed to meet financial-strength standards.

File photo shows office workers in Seoul., Photo: AFP

The four are Solomon, Mirae, Hanju and Korea Savings Bank, the Financial Services Commission said, amid moves to tighten the banking industry in South Korea.

"All operations of the savings banks including Internet banking were suspended from 6:00 am today," the commission said in a statement.

The banks were ordered to appoint new managers and improve their finances within 45 days. They will be put on sale if they fail to do so.

The commission said depositors would be allowed to get back up to 50 million won ($44,000) to avoid a run.

It promised to investigate any irregularities by major shareholders and executives of the banks. They were ordered to stay in South Korea for questioning.

Prosecutors said Mirae chairman Kim Chan-Kyong was arrested late Thursday while trying to flee to China at a port in the southwestern city of Hwaseong.

Last year the watchdog suspended 16 savings banks found to be in difficulty, mainly due to reckless investments in risky property projects.

Financial regulators have launched an extensive probe into irregularities by savings banks since Busan, the country's largest savings bank, was suspended in early 2011.

In February, Busan's eight executives received jail terms of up to 14 years for offences including a lobbying operation aimed at keeping the bank open and $5.3 billion of illegal lending.

Busan was found to have lobbied politicians and government officials to avoid having its operations suspended.

Prosecutors have questioned thousands of people and dozens of government officials, bank executives and others have been charged with corruption. Three bankers have committed suicide.

Source: AFP