Shinhan Bank Customers Invest 330 Million KRW Each in 'Dok Heritage DLS'... Group Outstanding Amount 180 Billion KRW

Per Capita Investment Amount: Bank 330 Million KRW, Securities 190 Million KRW
Future Maturity Amount 200 Billion KRW... Many Investment Items Not Properly Secured Until Maturity

[Asia Economy Reporter Kwon Haeyoung] The German Heritage Derivative-Linked Securities (DLS) sold by Shinhan Financial Group have seen repayment delays due to difficulties in local real estate development projects, causing the outstanding unpaid investment amount to swell to 180 billion KRW. Despite Shinhan Financial's efforts to recover the principal, investors' funds are expected to remain tied up for some time. In particular, among the 17 properties invested in by the German Heritage DLS, it has been reported that a considerable number of them do not have properly established collateral, making it uncertain whether the full principal can be recovered.

According to the financial sector on the 2nd, the outstanding balance of the German Heritage DLS sold by Shinhan Investment Corp. is 380 billion KRW, with repayments delayed on 180.5 billion KRW that have matured so far. Shinhan Investment also sold this product to Shinhan Bank customers through its complex branches. The unpaid amount is approximately 82.4 billion KRW for Shinhan Bank customers and 98.1 billion KRW for Shinhan Investment customers.

The German Heritage DLS invests in projects where the German German Property Group (GPG) purchases local monuments and registered preservation buildings to develop them into luxury residential facilities. Convertible bonds (CB) issued by GPG were acquired by Singapore's Banzaran Asset Management through a loan fund, and domestic securities firms issued DLS based on these assets, selling about 530 billion KRW through securities firms and banks. Shinhan Financial sold about 390 billion KRW through Shinhan Investment and has currently repaid only about 10 billion KRW.

Although Shinhan Investment was responsible for selling the product, the bank is also facing significant concerns. This is because the product was sold extensively to bank customers through Shinhan Financial's complex branches, which combine bank and securities sales offices. Essentially, customers who visited the bank were guided to the securities firm. In fact, the total sales amount and average sales per person at the bank exceed those of the securities firm. Based on outstanding balances, 637 Shinhan Bank customers invested a total of 211.1 billion KRW in this product from 2017 to 2018. The average investment per person is 330 million KRW. Shinhan Investment's total investment amount and average investment per person are 169.1 billion KRW and 190 million KRW, respectively, both less than the bank's figures.

For Shinhan Bank customers, the amount maturing in the near future, including 27.6 billion KRW this month, totals 128.7 billion KRW.

Another issue is the uncertainty regarding whether senior collateral has been properly established on the properties invested in by the German Heritage DLS. Among the 17 properties invested in by the German Heritage DLS sold to bank and securities customers by Shinhan Investment, it has been reported that several properties have passed maturity but do not have properly secured collateral. Although funds were raised under the premise of purchasing German cultural assets, some are only temporarily collateralized or are in the process of registration, and some have no collateral confirmed at all.

A Shinhan Investment official stated, "According to confirmation with the Singapore asset manager, only one of the investment properties lacked document verification, and the remaining 16 properties have collateral established." He added, "The asset manager has received authorization from the German developer to sell the assets, and repayment of investment funds will be made depending on the timing and price of the future sale."

There are also speculations that Shinhan Financial might prepay the investment funds. Recently, KB Securities repaid about 90 billion KRW in investment funds to individual investors in advance after the repayment of the 'JB Australia NDIS Fund,' which it had previously sold, was delayed due to fraud by the asset manager. The German Heritage DLS raised funds citing investment in German cultural assets but did not have properly established collateral, making the situation similar. At the time of fundraising, concerns about the creditworthiness of the German developer had also emerged overseas, adding to the controversy.

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