[Asia Economy Reporter Kangwook Cho] Shinhan Bank has made a final decision to reject the compensation recommendation for the foreign exchange derivative product KIKO. Additionally, it has decided to prepay half of the subscription amount for Lime Asset Management's CI Trade Finance Fund.
On the 5th, Shinhan Bank held a board meeting and announced that it would not accept the compensation recommendations for the four companies for which the Financial Supervisory Service's Dispute Mediation Committee made adjustment decisions.
The Shinhan Bank board had been reviewing the Financial Supervisory Service's KIKO compensation recommendation but had not reached a conclusion for six months. The notification period for acceptance was extended five times.
A Shinhan Bank official said, "It was not an easy decision, but after consulting multiple law firms and long internal deliberation, we reached the conclusion that acceptance was difficult," adding, "This decision was finally made through the board of directors."
However, regarding KIKO, for the remaining companies that have not received court rulings and for which the Financial Supervisory Service recommended voluntary adjustment agreements, Shinhan Bank decided to review the facts through participation in the bank consultative body and discuss appropriate response measures.
Previously, the Financial Supervisory Service's Dispute Mediation Committee found Shinhan, Woori, Industrial, Hana, Daegu, and Citi Banks responsible for incomplete sales and recommended compensation of 15-41% of losses to four companies: Ilseong Highsco, Namhwa Trading, One Global Media, and Jaeyoung Solutek. The compensation amounts are 15 billion KRW for Shinhan Bank, 4.2 billion KRW for Woori Bank, 2.8 billion KRW for Industrial Bank, 1.8 billion KRW for Hana Bank, 1.1 billion KRW for Daegu Bank, and 600 million KRW for Citi Bank, respectively.
In addition, the board decided to prepay 50% of the subscription amount to customers who subscribed to Lime Asset Management's CI Trade Finance Fund.
Shinhan Bank explained that although there were many internal and external disagreements about the plan for the seller to pay part of the investment before asset recovery due to losses caused by the inclusion of non-performing assets by Lime Asset Management, the management and outside directors actively agreed to the decision for proactive customer protection.
This prepayment plan involves prepaying 50% of the subscription amount of the Lime Asset Management CI Trade Finance Fund and later settling the balance based on asset recovery and the compensation ratio determined by the Financial Supervisory Service's Dispute Mediation Committee. Customers who accept the prepayment plan will still be able to proceed with dispute mediation and lawsuits through the Financial Supervisory Service.
A Shinhan Bank official said, "Since the suspension of redemption of the Lime Asset Management CI Trade Finance Fund, we have been reviewing various customer protection measures, but due to legal issues regarding prepayment of investment products, the process was difficult and took a long time to finalize," adding, "We hope this will alleviate the difficulties of customers who trusted and waited for Shinhan Bank, and we will do our best in asset recovery."
Shinhan Bank plans to finalize the details soon and hold briefing sessions for frontline branch employees, and will also engage in communication with customers going forward.
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