The Korea Times close
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
Business
  • Tech
  • Bio
  • Companies
Finance
  • Companies
  • Economy
  • Markets
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to the Editor
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
Entertainment
& Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
Sports
  • Beijing Olympics
World
  • SCMP
  • Asia
Video
  • Culture
  • People
  • News
Photos
  • Photo News
  • Darkroom
  • The Korea Times
  • search
  • Site Map
  • E-paper
  • Subscribe
  • Register
  • LogIn
search close
  • The Korea Times
  • search
  • Site Map
  • E-paper
  • Subscribe
  • Register
  • LogIn
search close
Finance
  • Companies
  • Economy
  • Markets
Thu, February 3, 2022 | 01:21
Companies
Woori, KEB Hana to compensate DLF investors
Posted : 2019-09-22 17:01
Updated : 2019-09-22 18:42
Print Preview
Font Size Up
Font Size Down
                                                                                                Woori Bank CEO Sohn Tae-seung
Woori Bank CEO Sohn Tae-seung
By Lee Kyung-min

Woori Bank and KEB Hana Bank are expected to compensate investors that are set to see losses from high-risk derivative products sold by the two banks, sources said Sunday.

The products in question, derivative-linked funds (DLF), are structured to track the performance of underlying assets such as interest rates and government-issued bond yields. Their returns are determined by the movements of those assets.

According to the Financial Supervisory Service (FSS), between 30 percent and 50 percent of the investment will be compensated provided that the products were indeed sold as a result of "irresponsible marketing," a claim raised by most of the victims.

They maintain they never consented to seeking profit beyond the point of losing initial investment.

The FSS is outlining compensation guideline for those cancelled the DLFs before the product maturity, a measure that could help fine-tune a more complicated one for those who held them to maturity.

"The draft of guideline made following months-long investigations will be referred to an outside committee for legal reviews," an FSS official said.

"Their reviews will then be handed over to FSS dispute mediation committee, whose recommendation will be delivered to both financial services firms and the complainants."

The FSS is believed to have found circumstantial evidence suggesting the two banks resorted to excessive marketing in violation of both relevant laws and in-house protocols, an indication of institutional failure of observing proper internal control.

                                                                                                Woori Bank CEO Sohn Tae-seung
KEB Hana Bank CEO Ji Sung-kyoo
The assessment stems from highly complex, complicated nature of the financial products.

The DLFs, a private equity fund whose profit is determined by yields of derivative-linked securities including 10-year German treasuries, promised an annual profit of up to 6 percent.

The relatively high profit was conditioned on the underlying assets' yields moving within a certain range, but the catch was if the yield fall below a certain level and continues plummeting, the investor was set to lose investment in its entirety.

Like among many other intricately structured financial products, the product was hard to understand.

This means the bank sales officials more likely than not have failed to ensure buyers understood how the products are designed to make profit as well as possible risks, grounds for punishment for "incomplete sales," which warrants compensation.

Other factors to determine the compensation rate includes whether the financial firms made recommendations reflecting the investors' source of income, age, financial knowledge and how much of a risk they are willing to take.

Meanwhile, a damage suit filed by two individuals and a corporate body among many other victims is set to begin Wednesday.

According to the Financial Consumer Agency (FCA), a consumer rights group, and Logos, a law firm, as many as 10 people will file a suit against the two banks for negligence.

More people will join the suit after establishing standing on charges of fraud.

The law firm said the banks' deliberate failure or neglect at best caused the losses and they should give the victims compensation in full.

The plaintiffs will also question the validity of the signatures from victims on the consent form, claiming the bank officials treated them as a mere formality without fulfilling their duty to clearly explain the products.

Emaillkm@koreatimes.co.kr Article ListMore articles by this reporter



 
  • A closer look at COVID-19 home treatment in Korea
  • Korea urged to explore ways to reduce China reliance
  • Indian students in Korea feel pinch due to soaring airfare
  • Daily life in Beijing as 2022 Winter Olympic Games kick off [PHOTOS]
  • Market Kurly, SSG.com uneasy about IPO amid plunging stock market
  • Woowa Brothers pressed to earn more for Delivery Hero
  • Lee, Yoon clash over health insurance coverage for foreign residents
  • Rival candidates churn out doubtful promises of construction projects
  • Concerns rise over post-holiday surge in COVID-19 cases
  • Banks protest regulators' call to expand bad debt allowance
  • Dark side of non-celebrities shooting to fame on reality TV shows Dark side of non-celebrities shooting to fame on reality TV shows
  • Not-to-miss art exhibitions, fairs in 2022 Not-to-miss art exhibitions, fairs in 2022
  • Jimin of BTS tests positive for COVID-19 Jimin of BTS tests positive for COVID-19
  • Former Miss USA Cheslie Kryst, 30, found dead after fall from Manhattan building Former Miss USA Cheslie Kryst, 30, found dead after fall from Manhattan building
  • BTS members send season's greetings to fans BTS members send season's greetings to fans
DARKROOM
  • Daily life in Beijing as 2022 Winter Olympic Games kick off [PHOTOS]

    Daily life in Beijing as 2022 Winter Olympic Games kick off [PHOTOS]

  • Celebrating Lunar New Year amid the ongoing pandemic

    Celebrating Lunar New Year amid the ongoing pandemic

  • Daily life in Afghanistan under Taliban rule

    Daily life in Afghanistan under Taliban rule

  • How snow looks around the world

    How snow looks around the world

  • Pictures of the year 2021

    Pictures of the year 2021

The Korea Times
CEO & Publisher : Oh Young-jin
Digital News Email : webmaster@koreatimes.co.kr
Tel : 02-724-2114
Online newspaper registration No : 서울,아52844
Date of registration : 2020.02.05
Masthead : The Korea Times
Copyright © koreatimes.co.kr. All rights reserved.
  • About Us
  • Introduction
  • History
  • Location
  • Media Kit
  • Contact Us
  • Products & Service
  • Subscribe
  • E-paper
  • Mobile Service
  • RSS Service
  • Content Sales
  • Policy
  • Privacy Statement
  • Terms of Service
  • 고충처리인
  • Youth Protection Policy
  • Code of Ethics
  • Copyright Policy
  • Family Site
  • Hankook Ilbo
  • Dongwha Group