Financial Company Earns 50 Billion Won by Selling Lime Fund

[Asia Economy Reporter Ko Hyung-kwang] It has been revealed that financial companies have earned as much as 50 billion KRW in fees over the past three years by selling Lime Asset Management's funds.

According to the Financial Supervisory Service on the 29th, a total of 30 financial companies, including 21 securities firms and 9 banks (including 5 special banks), were counted as having earned fees by selling Lime Asset Management's funds from 2017 to last year. The sales fees (including commissions) these financial companies received from customers while selling the funds amounted to 9.4 billion KRW in 2017, 16.9 billion KRW in 2018, and 25.1 billion KRW in 2019, totaling 51.4 billion KRW.

Among securities firms and banks combined, the financial company that earned the most fees was Shinhan Financial Investment, which earned a total of 13.5 billion KRW over three years. It received 4.2 billion KRW in 2017, 6.4 billion KRW in 2018, and even amid the redemption suspension incident last year, it earned 2.9 billion KRW in fees by selling the funds.

Among securities firms, besides Shinhan Financial Investment, Daishin Securities (4.7 billion KRW), Samsung Securities (1.7 billion KRW), Shinyoung Securities (1.7 billion KRW), NH Investment & Securities (1.6 billion KRW), KB Securities (1.4 billion KRW), and Korea Investment & Securities (1.4 billion KRW) were recorded as having earned fees exceeding 1 billion KRW. In addition, most securities firms such as Mirae Asset Daewoo (700 million KRW), SK Securities (500 million KRW), Yuanta Securities (500 million KRW), Meritz Securities (300 million KRW), and Hana Financial Investment (300 million KRW) received fees in the hundreds of millions of KRW while selling Lime funds.

Among banks, Woori Bank earned the most with 8.8 billion KRW, followed by Hana Bank (4.7 billion KRW) and Shinhan Bank (4.6 billion KRW), each earning over 4 billion KRW in fees. Next were NongHyup Bank (1.6 billion KRW), Busan Bank (1 billion KRW), KB Kookmin Bank (700 million KRW), Industrial Bank of Korea (600 million KRW), Gyeongnam Bank (600 million KRW), and Korea Development Bank (40 million KRW) in order.

Financial companies take a considerable amount in fees when selling various financial products. In the case of private equity funds, sales fees range from at least 1% to as much as 3% annually. Selling a 300 million KRW fund generates 3 million KRW in fee income on the spot. Most private equity funds impose a one-time fee at the time of sale. Additionally, commissions are settled over a specific period (6 months, 1 year, etc.) or at the final redemption point, and the sales commissions taken by financial companies are known to be about 1% annually of the fund amount. A securities industry official pointed out, "Due to Korea's distorted fund sales structure, upfront fees tend to be high," adding, "Among funds, private equity funds are sold secretly, so the fees are actually higher."

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