5 Major Banks Suspend Ostem Implant Fund... "The Atmosphere Has Changed" (Comprehensive)

KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup: Suspension of New Sales for Ostem Implant-Related Funds by 5 Major Commercial Banks

[Asia Economy Reporter Park Sun-mi] The five major domestic commercial banks have consecutively suspended the new sales of funds containing Ostem Implant, whose stock trading was halted due to an embezzlement scandal involving 188 billion won. This move is seen as a response reflecting consumers' changed expectations toward fund distributors following the private equity fund redemption suspension incident and the enforcement of the Financial Consumer Protection Act (FCPA).

According to the banking sector on the 7th, all five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?have suspended new sales of funds containing Ostem Implant.

KB Kookmin, Shinhan, and Woori Banks began suspending new sales of the related funds from this day. Woori Bank announced through a customer notice regarding the suspension of new sales of Ostem Implant-containing funds that it decided to halt new sales of five funds containing more than 1% of Ostem Implant for customer protection. These funds include ▲Woori Smart New Deal Securities Investment Trust No.1 (Equity) ▲DB Bio Healthcare Securities Investment Trust No.1 (Equity) ▲Korea Investment Navigator Securities Investment Trust No.1 (Equity) ▲KB Value Choice 30 Securities Investment Trust (Bond Mixed) ▲Woori Small and Medium-sized High Dividend Securities Investment Trust No.1 (Equity).

Shinhan Bank also suspended new sales of 17 Ostem Implant-related funds and one ETF product from this day, and KB Kookmin Bank suspended new sales of a total of 43 funds, including the KB Small and Medium-sized Stocks Focus Fund.

Earlier, Hana Bank was the first to make the suspension decision. Hana Bank has stopped new sales of 77 funds, including the ‘Samsung KOSDAQ 150 1.5x Leverage Securities [Equity-Derivative] CE Fund’ product containing Ostem Implant. NH Nonghyup Bank also suspended new subscriptions for 29 funds containing Ostem Implant.

At these banks, existing subscribers to the relevant funds can make additional payments or transfers, but new subscriptions to these funds are not allowed.

This decision reflects the fact that even if Ostem Implant, which is currently subject to a delisting suitability review, succeeds in resuming trading in the future, the stock price decline upon resumption could affect the fund’s net asset value. Most funds containing Ostem Implant have reflected the Ostem Implant stock price as of December 31 last year in their net asset value, making a decline in the net asset value inevitable upon future trading resumption.

The banking sector is concerned that the suspension of new sales of funds due to the Ostem Implant embezzlement scandal could spread, leading to a chain reaction where banks, as distributors, must suspend sales of related funds whenever issues arise with stock holdings.

A bank official explained, "Banks are suspending new sales of funds containing the relevant stock from a consumer protection perspective, but on the other hand, some say this is an excessive response. In the past, when there were various incidents related to stocks in the stock market, if the fund’s stock holding ratio was small, there was no decision to suspend fund sales."

The changed atmosphere is interpreted as stemming from the difficulties fund distributors faced during the private equity fund redemption suspension incident and the altered perception of consumers toward fund distributors following the enforcement of the FCPA. Another bank official said, "The atmosphere has definitely changed. Inside banks, opinions are divided between those who think that notifications and suspension of new sales are appropriate for consumer protection and those who see it as an excessive response. The Ostem Implant incident may set a precedent for banks’ future post-sale measures regarding funds."

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