Woori, Eeo City Bank Also "Reviewing Compensation for 39 KIKO Victim Companies"... Are Banks Gradually Accepting? (Comprehensive)

Actively Considering Compensation for 39 Overhedged Companies Excluding Ilseong Hysco with Large Debt Relief
Symbolic as Foreign Banks That Sold KIKO in Large Quantities Show Progressive Decision... Will Other Banks Follow Suit?

[Asia Economy Reporter Haeyoung Kwon] Following Woori Bank's acceptance of the Financial Supervisory Service's (FSS) dispute mediation proposal regarding the foreign exchange derivative product 'KIKO,' Korea Citibank has also decided to consider compensation for 39 affected companies by accepting the FSS's recommendation. While the FSS decided not to require compensation for companies that have already undergone large-scale debt relief, it plans to actively discuss compensation for other affected companies. Given that Citibank is a foreign bank that sold KIKO extensively around the 2008 global financial crisis, this conditional acceptance of compensation holds significant symbolic meaning.

According to financial sources on the 5th, Citibank held a board meeting the previous day to discuss whether to accept the KIKO compensation decision made by the FSS Dispute Mediation Committee in December last year, and reached this decision.

A Citibank official explained, "We have decided not to accept the FSS Dispute Mediation Committee's recommendation to compensate Ilseong Highsco," adding, "However, for some companies that have not yet received court rulings but were suggested by the FSS, we are reviewing the facts and considering appropriate compensation if deemed suitable in light of court decisions."

In December last year, after holding the Dispute Mediation Committee, the FSS recommended that Citibank compensate Ilseong Highsco with 600 million KRW, which is 15% of the KIKO damages. Citibank actively reviewed compensation for Ilseong Highsco, even requesting two extensions for decision-making, but ultimately decided not to accept the FSS's compensation recommendation after careful consideration. This is because Citibank had already granted debt relief exceeding the amount recommended by the FSS Dispute Mediation Committee through rehabilitation proceedings for Ilseong Highsco in 2012.

After long deliberation, Citibank decided to exclude Ilseong Highsco from KIKO compensation but concluded to actively discuss compensation for 39 affected companies that experienced KIKO overhedging. The bank has begun fact-finding investigations and expressed its intention to review active compensation within the scope of mis-selling recognized by the courts. The compensation amount for these companies is reported to be in the range of 40 billion KRW.

Following Woori Bank's sudden acceptance of the KIKO compensation plan last month, Citibank's proactive decision to conditionally accept compensation draws attention to the upcoming decisions of Shinhan Bank, KDB Industrial Bank, KEB Hana Bank, and Daegu Bank. Banks are required to notify the FSS of their acceptance of KIKO compensation by the 6th.

The most notable institution is Shinhan Bank. Shinhan Bank faces the largest compensation amount related to this dispute mediation, totaling 15 billion KRW. If it accepts this dispute mediation, the compensation amount during future voluntary adjustments could reach 40 billion KRW.

Shinhan Bank will hold a board meeting on the afternoon of the 6th to discuss the KIKO dispute mediation proposal. Although there are currently disagreements among outside directors, some are reportedly advocating for accepting the FSS dispute mediation proposal.

Hana Bank's decision is also being closely watched. The bank announced in early January that it would participate in a bank consultative body for KIKO voluntary adjustments. Participation in voluntary adjustments for 147 affected companies was conditional on accepting dispute mediation, indirectly indicating acceptance of KIKO compensation. However, at the board meeting held in early February, Hana Bank requested an extension of the decision deadline from the FSS, stating that further review of the KIKO dispute mediation proposal was necessary.

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