IBK to Hold Board Meeting on the 11th... Discovery Countermeasure Committee Requests Recalculation of Compensation Ratio

If the settlement proposal is accepted within 20 days, the settlement will be established

[Asia Economy Reporter Park Sun-mi] As a recommendation has been made to compensate 40-80% of the investment losses from the Discovery Fund sold by IBK Industrial Bank, attention is focused on whether the bank will accept the recommendation at the board meeting scheduled for the 11th.

According to the financial sector on the 3rd, IBK Industrial Bank will hold a board meeting on the 11th attended by President Yoon Jong-won, Senior Vice President Kim Sung-tae, and four outside directors. Since the bank usually holds a board meeting once a month, it is highly likely that the board will decide whether to accept the Financial Dispute Mediation Committee (FDM Committee) recommendation from the Financial Supervisory Service (FSS) to compensate 40-80% of the Discovery Fund investment losses. The bank previously stated regarding the FDM Committee’s decision, "We will proceed with the related procedures according to the decision. We will continue to strive to protect customers."

Although the FDM Committee’s compensation recommendation is not binding, the industry views the possibility of acceptance as high since IBK Industrial Bank has announced plans to proceed with related procedures according to the decision. Under Article 39 of the Financial Consumer Protection Act, if the parties (applicant and IBK Industrial Bank) accept the mediation proposal within 20 days after receipt, the mediation is established.

On the 24th of last month, the FDM Committee determined the basic compensation ratios for damages due to incomplete sales of the Discovery Fund sold by IBK Industrial Bank: 50% for the US Fintech Global Bond Fund (Global Bond Fund) and 45% for the US Fintech Real Estate Secured Debt Fund (Real Estate Secured Debt Fund). Accordingly, it recommended applying compensation ratios of 64% and 60% respectively to two investors. For the remaining affected investors, it recommended applying compensation ratios between 40% and 80%. This dispute mediation decision applies to Discovery Fund contracts worth 76.1 billion KRW sold by IBK Industrial Bank.

On the other hand, the Discovery Fund Fraud Victim Countermeasure Committee opposes the FSS’s decision recommending up to 80% compensation and demands a ‘contract cancellation due to mistake.’ At a press conference the day before, the committee urged the FSS for reasonable dispute mediation and compensation ratio calculation and submitted a request for re-mediation. According to Article 31, Paragraph 1, Subparagraph 4 of the Financial Dispute Mediation Rules, "If a party believes that the mediation committee has not judged an important matter affecting the mediation, they may apply for re-mediation of the committee’s decision."