KB Kookmin, Shinhan, Hana, NH Nonghyup, and Standard Chartered Korea Notified
Woori Bank Excluded from Preliminary Notification
On November 28, the Financial Supervisory Service (FSS) issued preliminary notifications to five banks that were involved in the mis-selling of Hong Kong H-Share Index (Hang Seng China Enterprises Index) Equity-Linked Securities (ELS), informing them of a combined penalty, including fines, totaling approximately 2 trillion won. If penalties in the trillion-won range are finalized, it is expected to have a significant impact on the capital ratios of the banking sector.
Stakeholders of the Hong Kong H Index (Hang Seng China Enterprises Index) Equity-Linked Securities (ELS) incident victim group held a press conference on April 24 last year in front of the Financial Supervisory Service headquarters in Yeouido, Seoul, shouting slogans demanding the prosecution of 180 individuals including financial institutions and executives responsible for the damages, as well as former Financial Services Commission chairpersons, and calling for full compensation. Photo by Yonhap News
According to financial authorities and the banking sector, the FSS sent preliminary notifications to each of the selling banks on this day, in accordance with the penalty supervision regulations under the Financial Consumer Protection Act.
KB Kookmin Bank, Shinhan Bank, Hana Bank, NH Nonghyup Bank, and Standard Chartered Korea were notified of the imposition of penalties and fines.
Woori Bank was excluded from the preliminary notification as its sales volume was the smallest.
The total amount of penalties and fines is reported to reach approximately 2 trillion won.
The Financial Consumer Protection Act allows financial authorities to impose penalties of up to 50% of the 'income' gained through illegal activities or an equivalent amount.
It is important to determine whether 'income' refers to the 'sales amount' or 'fees.' The FSS is reported to have calculated the penalties based on the sales amount.
The FSS will submit the agenda to the Sanctions Review Committee on December 18 to begin the formal sanction process.
The final amount of penalties to be imposed will be determined by the Financial Services Commission.
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