Woori Bank and IBK, Lime Fund Dispute Mediation... Focus on Compensation Ratio

Earlier, KB Securities reported 60%

[Asia Economy Reporter Wondara] The Financial Supervisory Service (FSS) is set to begin dispute resolution procedures against banks that sold Lime Asset Management funds. The FSS has decided to proceed with dispute resolution even if losses have not been confirmed, as part of a swift victim relief effort. The process will be based on an "estimated damage amount" and settled afterward. The financial sector is closely watching the basic compensation ratio. Previously, KB Securities received 60%, but considering the unique characteristics of banks, it is expected that the ratio could be set higher.

On the 23rd, the FSS will hold a dispute resolution committee meeting targeting Woori Bank and Industrial Bank of Korea, which sold Lime funds. The scale of Lime fund sales by Woori Bank and Industrial Bank of Korea amounts to approximately 270 billion KRW and 28 billion KRW, respectively. If Woori Bank and Industrial Bank of Korea provide compensation at a certain ratio first, the process will then settle additional repayment amounts after loss confirmation according to the basic compensation ratio. In the case of KB Securities, the basic compensation ratio was set at 60%, and voluntary adjustments were made with compensation ratios ranging from 40% to 80% depending on investors’ experience.

Some analysts suggest that the average compensation ratio for Woori Bank and Industrial Bank of Korea may be higher than that of KB Securities, given that bank investors tend to have a more conservative investment style compared to securities investors. This is based on the premise that securities customers have an "aggressive investment" tendency, whereas bank customers are relatively stability-oriented.

Woori Bank’s Disciplinary Hearing on the 25th... Consumer Protection Office to Attend as Witness

Within the financial sector, it is expected that even if a high compensation ratio is determined, the banks facing disciplinary hearings will accept it and focus on agreeing to investor compensation plans. This is particularly relevant for Woori Bank, whose Chairman Sohn Tae-seung was pre-notified of a "suspension of duties," with the disciplinary hearing scheduled just two days later on the 25th. Last year, the FSS revised the enforcement rules on financial institution inspections and sanctions to include "whether sufficient compensation and victim recovery efforts have been made for financial transaction victims" as a factor to consider when determining sanctions.

The Consumer Protection Office, which oversees the dispute resolution committee, will attend the bank disciplinary hearings as a witness. KB Securities accepted the FSS’s dispute resolution plan related to Lime funds, and subsequently, three investors who purchased Lime funds from KB Securities accepted the compensation plan proposed by the dispute resolution committee, marking the first establishment of dispute resolution for Lime funds with unconfirmed losses. In a subsequent disciplinary hearing, the penalty level for CEO Park Jung-rim was lowered from the pre-notified suspension of duties to a "reprimand."

Following the dispute resolution for Woori Bank and Industrial Bank of Korea, dispute resolutions for other sellers are expected to continue. NH Nonghyup Bank, Busan Bank, and Gyeongnam Bank are among the candidates. Among securities firms, Shinhan Financial Investment and Daishin Securities are expected to either undertake voluntary adjustments based on KB Securities’ standards or go through separate dispute resolution committees.

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