Court Grants Suspension of Disciplinary Action Against Hana Bank for DLF... Financial Authorities and Bank Brace for Legal Battle

[Asia Economy Reporter Kim Min-young] The disciplinary actions against Hana Bank and executives including Vice Chairman Ham Young-joo of Hana Financial Group, who caused massive losses to customers by selling overseas interest rate-linked derivative-linked funds (DLF), will be temporarily suspended. A fierce legal battle is expected between Hana Bank and financial authorities over the appropriateness of the disciplinary measures in the main lawsuit.

According to the legal and financial sectors on the 29th, the Seoul Administrative Court Administrative Division 5 (Presiding Judge Park Yang-jun) accepted Hana Bank's request for a suspension of the enforcement of the financial authorities' severe disciplinary action on DLF on the same day.

The suspension requests filed by Vice Chairman Ham, Jang Kyung-hoon, President of Hana Card, and Park Se-gul, former WM Business Division Head of Hana Bank, were also accepted together.

According to the court's decision, the disciplinary measures will be suspended until the day 30 days after the first trial verdict of the main case.

Earlier, on March 5, the Financial Services Commission notified Hana Bank and Woori Bank, which sold DLFs, of sanctions including a six-month partial suspension of business (new sales of private equity funds) and fines. The fines imposed on the two banks were 16.78 billion KRW and 19.71 billion KRW respectively, which were somewhat lower than the fines reported by the Financial Supervisory Service to the Financial Services Commission for sanctions.

The Financial Services Commission also issued severe disciplinary warnings to Vice Chairman Ham, who was the head of the two banks at the time of the DLF incident, and Sohn Tae-seung, Chairman of Woori Financial Group.

Hana Bank filed a lawsuit on the 1st, arguing that the six-month suspension of new private equity fund sales could significantly impact the bank's management. They also filed a request for suspension of enforcement.

Executives including Vice Chairman Ham also filed lawsuits and requested suspension of enforcement in their personal capacity, seeking to restore their honor through court judgment.

The court accepted the suspension request. The court explained, "Considering the content and circumstances of the disciplinary action, Hana Bank's activities, the sales method and risks of the DLF product, the degree of evidence, and whether procedural rights were guaranteed, it is not easy to conclude that the main claim is clearly groundless." This means it is worth examining through litigation whether the sanctions were appropriate.

The court further stated, "If the enforcement of the disciplinary action is not suspended, Hana Bank faces concerns of credit damage and loss of new business opportunities, and other applicants will not be able to assume executive positions at financial companies for a considerable period. Even if they win the main lawsuit later, there is a significant risk of irreparable damage, so there is an urgent need to suspend enforcement."

The court also said, "Suspending the enforcement is unlikely to have a serious impact on public welfare."

Previously, the court accepted a similar suspension request filed by Chairman Sohn for similar reasons.

It appears that Hana Bank is relieved to be able to resume private equity fund sales.

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