Korea Credit Rating on the 15th stated regarding Shinhan Investment Corp.'s 130 billion KRW scale loss in managing an Exchange-Traded Fund (ETF), "It is a tolerable level, but the financial impact needs to be confirmed."
In a report released that day, Korea Credit Rating analyzed, "The expected loss of 130 billion KRW due to the financial accident is about 61.7% of the net profit for the first half of 2024 (210.6 billion KRW), and a negative impact on the profit and loss for the third quarter of 2024 is inevitable."
Korea Credit Rating evaluated, "It is a minimal level, about 2.4% of capital (approximately 5.4 trillion KRW as of the end of June 2024), and considering the business portfolio and regular profit-generating capacity, it is a tolerable level."
Furthermore, they stated, "Monitoring is necessary regarding the final loss size in the future, the level of sanctions by supervisory authorities, the impact on the company's reputational capital, and appropriate follow-up measures through strengthening risk management capabilities and internal controls."
Meanwhile, Shinhan Investment Corp. announced on the 10th, "We engaged in on-exchange futures trading beyond the purpose of ETF liquidity provider (LP) activities, resulting in excessive losses," and "We confirmed that these were falsely registered as swap transactions."
The loss amount of 130 billion KRW was confirmed due to on-exchange futures trading and liquidation, and it was explained that the loss size may change depending on the investigation results. Currently, internal audits by Shinhan Investment Corp. and on-site investigations by the Financial Supervisory Service are underway.
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