'DLF Incomplete Sales' Woori Bank 19 Billion KRW and Hana Bank 16 Billion KRW Fine Reduction

The Securities and Futures Commission Lowers Fine Amount Considering Autonomous Compensation Decision

[Asia Economy Reporter Jo Gang-wook] The fines imposed on Woori Bank and Hana Bank for the incomplete sales of overseas interest rate-linked derivative-linked funds (DLF) have been reduced.

According to financial authorities on the 13th, the Securities and Futures Commission under the Financial Services Commission discussed the fines imposed on Woori and Hana Banks related to DLF at the regular meeting held the day before. It was decided to reduce the fine for Woori Bank from 23 billion KRW to 19 billion KRW, and for Hana Bank from 26 billion KRW to 16 billion KRW, as recommended by the Financial Supervisory Service (FSS). The other institutional sanction, a 'partial business suspension for 6 months,' is based on the Banking Act and will be reviewed directly at the full meeting of the Financial Services Commission, not by the Securities and Futures Commission, which handles violations of the Capital Markets Act.

At the Securities and Futures Commission meeting, the focus was on whether the incomplete sales of DLF by the two banks violated the Capital Markets Act. There was consensus that due to the high rate of incomplete sales, it was necessary to alert the banks to the seriousness of the issue. Both banks reportedly acknowledged the incomplete sales practices.

The reduction in the fines is said to have taken into account that the banks accepted the Financial Supervisory Service’s Dispute Mediation Committee’s mediation results and decided on voluntary compensation. On the 15th of last month, Woori Bank and Hana Bank held a meeting and decided to proceed with voluntary compensation based on the FSS’s dispute mediation decision, starting the compensation process through their branches.

With the fine sanctions passing at the Securities and Futures Commission, there is a high possibility that the agenda for the Financial Services Commission’s regular meeting on the 19th will include the partial six-month business suspension sanctions against the two banks, including the fines. In this case, considering the period for submitting opinions, the sanctions could take effect without delay beyond early March.

If the Financial Services Commission notifies the severe sanctions in early March, the reappointment of Chairman Son will become even more complicated. Previously, the severe sanctions against Son Tae-seung, Chairman of Woori Financial Group and Woori Bank, and Ham Young-joo, Vice Chairman of Hana Financial Group (who was Hana Bank’s CEO at the time of DLF sales), were already confirmed with the approval of the FSS Commissioner. They received the 'disciplinary warning' sanction, which restricts executive reappointment and employment in the financial sector for three years. However, Woori Financial Group, including Chairman Son, has indicated plans to file an administrative lawsuit against the FSS sanctions, so there is a possibility that Chairman Son’s term may be maintained during the legal dispute period.

This content was produced with the assistance of AI translation services.