IBK, Accepts FSC Dispute Resolution Proposal for 'Discovery Fund Compensation'

[Asia Economy Reporter Song Seung-yoon] Industrial Bank of Korea (IBK) has decided to accept the Financial Supervisory Service's Dispute Mediation Committee (DMC) compensation adjustment plan, which requires IBK to compensate up to 80% of the investment losses from the Discovery private equity fund.

At the board meeting held on the afternoon of the 11th, IBK concluded to accept the DMC decision regarding the Discovery fund, which was notified on the 24th of last month.

The Financial Supervisory Service held the DMC last month and recommended that IBK, which sold the Discovery fund, compensate up to 80% of the investment losses. The target includes an outstanding balance of 76.1 billion KRW (269 accounts) of the Discovery fund sold by IBK as of the end of April.

From 2017 to 2019, IBK sold the 'Discovery US Fintech Global Bond Fund' and the 'Discovery US Real Estate Senior Bond Fund' in amounts of 361.2 billion KRW and 318 billion KRW, respectively. However, the US asset manager failed to recover the bonds invested with the fund's capital, resulting in redemption delays of approximately 60.5 billion KRW and 15.6 billion KRW, respectively.

IBK plans to prioritize compensation to victims based on the estimated loss amount through the adjustment decision, and will conduct additional recovery and post-settlement once the losses are confirmed. IBK stated, "We plan to minimize damages through prompt voluntary compensation."