Hana vice chairman files injunction against FSS sanctions

Hana Financial Group Vice Chairman Ham Young-joo

By Park Jae-hyuk

Hana Financial Group Vice Chairman Ham Young-joo filed an injunction Monday against sanctions imposed by the Financial Supervisory Service (FSS) over a fiasco involving derivative-linked funds (DLFs), which have blocked him from becoming chairman, industry sources said Tuesday.

According to the sources, other Hana executives who face sanctions over the DLF fiasco ― Hana Card CEO Chang Kyung-hoon and Hana Bank senior managing director Park Se-geol ― have also filed injunctions.

They said the executives filed as individuals, not through the company.

In March, the FSS notified Woori Financial Group Chairman Son Tae-seung and the Hana executives of the sanctions imposed on them, after the Financial Services Commission (FSC) finalized sanctions against banks and bank executives it held responsible for major investor losses caused by the mis-selling of high-risk DLFs.

The financial authorities said Ham and Son had failed to fulfill their duties to prevent the fiasco, when they were serving as the CEOs of Hana and Woori banks, respectively.

Son filed an injunction against the sanctions immediately after he received notification from the FSS, because he was about to be reappointed as the chairman at a shareholders general meeting March 25.

He has been able to continue leading the group, because the court granted an injunction.

Considering this, the court is expected to make the same decision on Ham, whose term as vice chairman ends in December.

Meanwhile, Hana Bank also filed administrative litigation Monday against the sanction that bans the lender from selling private equity funds (PEFs) until Sept. 4.

This litigation came as the deadline for filing an objection to sanctions over the DLF fiasco is Wednesday.

When the FSC finalized sanctions against Hana and Woori banks in March, the two banks faced the six-month suspension order and a combined 36 billion won ($29 million) in fines ― 16.7 billion won for Hana and 19.7 billion won for Woori.

The two banks appealed the regulator's decision on the fines, May 22.

The DLF products were designed to return large profits when the interest rates of specific countries, such as the United Kingdom and Germany, stayed above a certain level.

Many Korean consumers, however, suffered up to 90 percent losses after interest rates and bond yields in the advanced economies plunged.

The banks have been accused of mis-selling DLF products as they did not provide enough information regarding risks inherent in the products.