Woori and Hana Bank to Complete DLF Voluntary Compensation Possibly Within This Month (Comprehensive)

Received Financial Supervisory Service's Voluntary Compensation Standard Proposal This Week
Woori Bank Approximately 600 Cases, Hana Bank Approximately 400 Cases

[Asia Economy Reporter Kim Hyo-jin] The voluntary compensation procedures by major selling banks for losses related to overseas interest rate-linked derivative-linked funds (DLF) are expected to be completed as early as this month.

According to financial authorities and the financial sector on the 14th, DLF selling banks such as Woori Bank and KEB Hana Bank will receive compensation standard guidelines for voluntary compensation from the Financial Supervisory Service (FSS) during this week and start the compensation procedures based on them. Woori Bank has about 600 cases, and KEB Hana Bank has about 400 cases.

The compensation standard guidelines were created based on the mediation results for six loss victims who applied for dispute mediation with the FSS Dispute Mediation Committee. The two banks had already completed compensation procedures for these six individuals on the 7th. One investor on Woori Bank’s side, who was recommended the lowest compensation rate of 40% among the six, accepted the compensation plan on this day, marking the final acceptance.

The Dispute Mediation Committee set a basic uniform compensation of 20%, with compensation principles ranging from 40% to 80% depending on each investor’s circumstances such as past investment experience and transaction scale. The two banks accepted the committee’s decision and have been proceeding with compensation since last year. Compensation payments were made immediately after the dispute mediation results were announced.

A bank official said, "We can say that the voluntary investigation for investors who did not apply for dispute mediation with the FSS has been completed," adding, "We plan to proceed with compensation as quickly as possible, so the compensation procedures could all be finished within this month."

Woori Bank is operating an internal task force (TF) responsible for compensation work. Sohn Tae-seung, Chairman of Woori Financial Group (and Woori Bank President), instructed at the expanded sales headquarters meeting on the 23rd of last month to "do your best in matters related to DLF compensation."

KEB Hana Bank has formed a 'DLF Compensation Committee' composed of six external experts from academia, the legal community, and civic groups to conduct investigations. Additionally, to strengthen consumer protection functions, the bank independently placed the head of the Consumer Protection Group and the head of the Customer Happiness Headquarters, and newly established the Social Value Headquarters under the Management Planning Group.

Meanwhile, the FSS’s disciplinary review committee regarding executives including Chairman Sohn and Vice Chairman Ham Young-joo of Hana Financial Group, as well as institutions (banks), will be held on the 16th and 30th. Additional disciplinary reviews may be held afterward depending on the situation. The FSS has given prior notice of the possibility of severe disciplinary action (official warning) against Chairman Sohn and others.

If the FSS decides on severe disciplinary action as pre-notified, it is highly likely that administrative litigation procedures challenging the decision will follow. This is because the matter is serious and could significantly affect the overall management structure of the two banks. The two banks plan to make every effort to prove the unfairness of the severe disciplinary action and reduce the level of discipline during this disciplinary review, which will be held as a grand hearing.

This disciplinary review committee consists of a total of nine members: four ex officio members including representatives from the FSS and the Financial Services Commission, and five civilian members.