'독 Heritage DLS' What to Do... Shinhan Bank Customers Invest an Average of 330 Million Won Per Person (Comprehensive)

Per Capita Investment: 330 Million KRW in Banks, 190 Million KRW in Securities
Shinhan Financial, German DLS with 200 Billion KRW Maturing Soon... Many Investment Items Lack Proper Collateral 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 investment amount to swell to 180 billion KRW. Based on the current outstanding balance, the average investment per person is 330 million KRW for bank customers and 190 million KRW for securities customers. Among the 17 properties invested in by the German Heritage DLS, it has been reported that a considerable number do not have properly established collateral, making it uncertain whether investors will be able to recover their principal despite Shinhan Financial's efforts.

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 outstanding 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 approximately 390 billion KRW through Shinhan Investment and has so far repaid only about 10 billion KRW.

Although Shinhan Investment was responsible for product sales, the bank is also facing significant concerns. This is because the product was heavily sold to bank customers through Shinhan PWM Center, a complex branch combining bank and securities operations. The Shinhan PWM Center is a place where private banker (PB) team leaders from both the bank and securities provide comprehensive financial services in one space. Essentially, customers who came to the bank were guided to the securities firm to purchase this product. In fact, the total sales amount and average sales per person at the bank exceed those of the securities firm. Based on the outstanding balance, 637 Shinhan Bank customers invested a total of 211.1 billion KRW in this product between 2017 and 2018. The average investment per person is 330 million KRW. Shinhan Investment's total investment amount and average 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 due this month, totals 128.7 billion KRW.

Another issue is the uncertainty regarding the establishment of senior collateral on the properties invested in by the German Heritage DLS. The investment properties of the German Heritage DLS sold to bank and securities customers by Shinhan Investment include power plants, barracks, monasteries, castles, factories, and churches. Among these 17 investment properties, it has been reported that several have passed maturity without proper collateral being secured. 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 in some cases, collateral has not even been confirmed.

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 have collateral established," adding, "The asset manager has been authorized by the German developer to sell the assets, and repayment of investment funds will be made depending on the timing and price of the sale."

There are also speculations that Shinhan Financial might prepay the investment funds. Recently, KB Securities repaid about 90 billion KRW to individual investors in advance after delays in repayment of the 'JB Australia NDIS Fund' due to fraud by the asset manager. The German Heritage DLS similarly raised funds citing investment in German cultural assets but did not have properly established collateral. At the time of fundraising, concerns about the creditworthiness of the German developer emerged overseas, which has sparked controversy. This raises questions about the overall risk management capabilities of the related financial companies, including the sellers.

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