Hana Bank Postpones Decision... Woori Bank Faces Growing Concerns Over 'Lime Compensation'

Hana Bank Delays Acceptance Decision After Board Meeting on 21st
Other Financial Firms Like Woori Bank Expected to Make Similar Decisions

[Asia Economy Reporter Kim Min-young] As Hana Bank's board of directors has postponed the decision on whether to accept the Financial Supervisory Service's (FSS) recommendation for full compensation related to consumer damages from the Lime Asset Management trade finance fund, other sellers such as Woori Bank are also expected to make similar decisions one after another. The postponement of the decision implies that "accepting it is not easy," and there is a prevailing view that the possibility of resolving the issue as suggested by the FSS is very low.

According to financial circles on the 22nd, Woori Bank will discuss whether to accept the FSS recommendation at its board meeting on the 24th. The deadline for response set by the FSS is the 27th. It is also known that Woori Bank's board is leaning toward postponing the decision. A Woori Bank official said, "It is difficult to specifically gauge the direction of the discussion," but added, "We will likely deliberate in a similar context to Hana Bank."

Hana Bank Board Postpones Decision

Hana Bank's board requested the FSS to extend the deadline for the decision until the next board meeting, stating that "if the (FSS) Dispute Mediation Committee's decision is accepted, the mediation will be established and will have the same effect as a settlement in court, so it is necessary to review the acceptance more carefully."

A financial industry insider explained, "Hana Bank's judgment can serve as a kind of 'guideline,'" adding, "When multiple banks or sellers face a common issue like this, discussions and decisions generally proceed along similar lines."

The insider also predicted, "If one institution has already made a judgment, others are likely to take a very conservative approach by trying to find reasons why 'nevertheless, we must make a different decision,'" and said, "Contract cancellation due to legal error could expose executives or board members to breach of fiduciary duty issues, so it will be difficult to fully accept the Dispute Mediation Committee's compensation plan."

Earlier, on the 30th of last month, the FSS Dispute Mediation Committee applied Article 109 of the Civil Act, 'Contract Cancellation Due to Mistake,' to four dispute mediation applications related to Lime trade finance funds sold since November 2018, and decided on 100% compensation. This is the first recommendation for full principal compensation for investment products.

The scale of sales for the fund is largest at Woori Bank with 65 billion KRW, followed by Shinhan Financial Investment with 42.5 billion KRW, Hana Bank with 36.4 billion KRW, Mirae Asset Daewoo with 9.1 billion KRW, and Shinyoung Securities with 8.1 billion KRW, totaling 161.1 billion KRW.

Lime Fund Compensation Plan, a Second KIKO?

Some voices are already emerging, predicting a scenario similar to the 'KIKO' case, where sellers keep postponing decisions and eventually reject the recommendation. Unless sellers make a magnanimous decision, the Lime compensation issue is bound to become tangled like KIKO.

The FSS has stated that it will accept requests to extend the deadline for sellers' acceptance decisions if it deems the reasons reasonable. However, considering the seriousness of the matter, the FSS holds that banks and other sellers have the responsibility to make decisions as promptly as possible. An FSS official said, "We will not allow a situation where decisions are continuously postponed multiple times like in the KIKO case."

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