Yoon Seok-heon, Financial Supervisory Service Chief: "Lime Bad Bank to be Established Next Month... Sanction Procedures Possibly in June"

[Image source=Yonhap News]

[Asia Economy Reporter Kangwook Cho] Yoon Seok-heon, Governor of the Financial Supervisory Service (FSS), announced on the 28th that a so-called "bad bank" to resolve Lime Asset Management's non-performing funds related to the 'Lime incident,' where redemption of approximately 1.7 trillion KRW investment funds was suspended, will be established in May, and that the sanction procedures against Lime Asset Management could begin in June.

On the same day, during a written press conference marking his 2nd anniversary in office, Governor Yoon said regarding the establishment of the bad bank, "There are some minor disagreements among several companies involved in creating a dedicated fund transfer company, but we expect these to be resolved within May."

He also emphasized, "Rather than Lime Asset Management continuing to hold the funds, it seems appropriate to transfer and resolve them through the bad bank method," adding, "Because changing the operating entity allows for a cleaner and fairer handling."

Governor Yoon anticipated that after establishing the bad bank in May, the sanction procedures could begin in June.

He explained, "An inspection of the asset management side is ongoing, and after establishing the bad bank in May, I think the outline of the sanctions will emerge by June. The sanction procedures could start as early as June."

Governor Yoon also mentioned that a joint investigation on dispute resolution is underway and is expected to conclude within this week.

However, he noted, "There are two issues. One is the problem of some contract cancellations. We hope that (sales companies and investors) resolve these issues autonomously as much as possible, but if not, dispute resolution will be pursued."

He continued, "The parts where contract cancellations are possible need to be handled separately, and since this requires legal review, we must be cautious. If financial companies voluntarily compensate for issues arising in the market, the process can be faster in terms of timing. If not, the FSS will proceed with dispute resolution. This is the expected sequence."

He further emphasized, "Hana Bank (Italy Healthcare Fund), Shin Young Securities (Lime Asset Management Fund), and KB Securities (Australian Real Estate Fund) have also made voluntary compensations. Although it might cause some misunderstandings if the FSS urges this, I hope such cases continue to spread."

Regarding criticism that the FSS's response to this incident was delayed, Governor Yoon said, "At first, we were worried about a fund run, and the due diligence took longer than expected. After some consideration, the issue was resolved through fund transfer, leading to the current situation. In that process, it could have been faster, but there was some delay."

About Kim, a former team leader involved in the Lime Asset Management incident who was arrested, Governor Yoon stated, "We will take disciplinary action after reviewing the prosecution's investigation. Although we have not conducted deep internal audits on other employees, if related individuals emerge, we will proceed with audits."

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