Q1 Disciplinary Reviews for Woori, Shinhan, Industrial, Busan, Hana Banks, and Others Follow in Succession
On the 13th, in front of the Financial Supervisory Service in Yeongdeungpo-gu, Seoul, members of the National Private Equity Fund Fraud Victims Joint Countermeasures Committee held a rally urging dispute mediation for victim protection. Photo by Moon Honam munonam@
[Asia Economy Reporter Jo Gang-wook] The Financial Supervisory Service's disciplinary committee for banks, which sold private equity funds such as Lime and Discovery, will begin at the end of this month. The first target is IBK Industrial Bank of Korea.
According to the financial sector on the 17th, the Financial Supervisory Service plans to hold a disciplinary hearing for Industrial Bank of Korea on the 28th.
From 2017 to 2019, Industrial Bank of Korea sold Discovery US Fintech Global Bond Fund and Discovery US Real Estate Senior Bond Fund worth 3,661.2 billion KRW and 318 billion KRW, respectively. However, as the US asset manager failed to recover the bonds invested with the fund's money, redemptions totaling 91.4 billion KRW, including 6.95 billion KRW and 2.19 billion KRW per fund, have been suspended.
In addition, Industrial Bank of Korea also sold Lime Fund worth 29.4 billion KRW, which caused a large-scale redemption suspension incident.
In June last year, Industrial Bank of Korea made a private settlement contract with investors and prepaid up to 50% of the initial principal of the Discovery Fund investment to investors. The remaining amount will be finally compensated through the Financial Supervisory Service's Dispute Mediation Committee (Dispute Committee). The final compensation amount will be settled by offsetting the prepaid compensation.
The Financial Supervisory Service plans to conduct disciplinary hearings for Woori, Shinhan, KDB, Busan, and Hana Banks involved in the private equity fund incident from February to March, starting with Industrial Bank of Korea. Initially, Financial Supervisory Service Governor Yoon Seok-heon stated that the disciplinary hearings should have started in December last year, but due to delays in inspections of banks caused by the COVID-19 pandemic, the schedule was postponed.
Earlier, at the end of last year, the Financial Supervisory Service imposed severe disciplinary actions such as 'suspension from duty' on former Shinhan Financial Investment CEO Kim Hyung-jin, former Daishin Securities CEO Na Jae-cheol (current chairman of the Korea Financial Investment Association), and former KB Securities CEO Yoon Kyung-eun, and a 'reprimand' on KB Securities CEO Park Jung-rim during the disciplinary hearings for securities firms. KB Securities CEO Kim Sung-hyun and former Shinhan Financial Investment CEO Kim Byung-chul received a mild disciplinary action of 'cautionary warning.'
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