Shinhan Bank's Lime CI Fund Sales to Begin Repaying Half of Principal Starting Next Month

Rhyme CI Fund to Repay in Four Installments from March to June... Remaining Investment Repayment Expected to Prolong

[Asia Economy Reporter Kwon Haeyoung] Shinhan Bank has informed investors that it and the asset management company will prioritize repaying 50% of the principal over four months, amid funds from Lime Asset Management's Credit Insured (CI) fund sold by the bank flowing into bad funds. Shinhan Bank sold the fund until the end of August, one month after suspicions of Lime Asset Management's fund yield recycling surfaced in July last year, and with the full principal repayment date and even the possibility of repayment becoming uncertain, investor dissatisfaction is mounting.

According to financial authorities on the 28th, Shinhan Bank delivered a notice from Lime Asset Management on the 25th stating that from April, it will repay part of the investment funds to Lime CI fund investors whose maturity is approaching, in four installments from March to June.

In the case of Fund A, sold in June last year with a scale of 20 billion KRW, the principal and profits should be repaid upon maturity in June after one year, but the seller and asset manager notified that only about 52% invested in normal bonds will be paid. They explained that payments will be split into 12% in March, 15% in April, 16% in May, and 9% in June.

Shinhan Bank sold a total of 13 series funds worth 270 billion KRW from April to August last year, but 7-30% of the fund amount flowed into two bad funds: Lime Pluto-FI D-1 and Lime Pluto-TF 1. When redemptions of these funds were abruptly suspended in October of the same year, the redemption delay of the Lime CI fund, which had invested about 100 billion KRW, became inevitable. Lime Pluto-TF 1 has not even undergone due diligence yet.

A Shinhan Bank official said, "Once the maturity of normal accounts receivable comes due, we plan not to reinvest but to pay investors," adding, "We will start repayments as soon as investment funds are recovered even before the fund maturity to minimize investor damage."

Earlier, IBK Industrial Bank, which sold Lime Asset Management's bad funds in trust form, also recovered normal fund investments first and returned part of the principal to investors in December last year, well before maturity.

Investors, who have only recovered half of their principal and face uncertainty in recovering the remaining investment funds, are expressing dissatisfaction. Although Lime Asset Management's misconduct caused this situation, as the asset manager's payment capacity weakens, criticism is focusing on the seller, Shinhan Bank. Shinhan Bank claims that Lime Asset Management changed the management method without obtaining consent from the seller and investors, and that the seller is also a victim.

The timing of Shinhan Bank's fund sales is also controversial. The suspicions of Lime Asset Management's yield recycling arose in July last year when the prosecution began an investigation, and the Financial Supervisory Service started an inspection a month later in August. Shinhan Bank sold two Lime CI funds at the end of July and three at the end of August. This means 40% of the 13 series of CI funds sold by Shinhan Bank were sold after the Lime controversy broke out.

A Shinhan Bank official explained, "At that time, it was a problem with some funds due to the use of undisclosed information, not a general insolvency issue of Lime Asset Management's funds," adding, "According to the asset manager's confirmation, it was a personal issue, and the funds were managed normally until the end of September."

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