Banking Sector Halts New Sales of Osstem Implant Funds... "The Atmosphere Has Changed" (Comprehensive Report 2)

Major Commercial Banks and Regional Banks
Halt New Sales of Funds Related to Osstem Implant

[Asia Economy Reporters Sunmi Park, Hyojin Kim] The five major domestic commercial banks and regional 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 KRW. This is seen as a response reflecting the changed consumer expectations toward fund sellers 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, for customer protection, it decided to suspend new sales of five funds containing more than 1% of Ostem Implant. 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 types of 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,' which contains Ostem Implant. NH Nonghyup Bank also suspended new subscriptions for 29 funds containing Ostem Implant. Existing subscribers to these funds at these banks can make additional payments or transfers, but new subscriptions to these funds are not allowed.

Regional Banks Also 'All Stop' Following the Five Major Banks

Regional banks are also responding swiftly by suspending sales of Ostem Implant-related funds. BNK Busan Bank stopped sales of one fund with an Ostem Implant holding ratio of over 1%. DGB Daegu Bank suspended new subscriptions and additional deposits for funds with an Ostem Implant holding ratio of over 1% and sent notices about risks that could affect returns. For subscribers to funds with a holding ratio below 1%, they sent notices informing them of the holding ratio and advising caution in future investments.

This decision reflects the fact that Ostem Implant, currently subject to a delisting suitability review, could still impact fund net asset values due to stock price declines even if trading resumes successfully. Most funds containing Ostem Implant have reflected the stock price as of December 31 of last year in their net asset values, making a decline in net asset value inevitable upon 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 fund sellers, must suspend sales of related funds whenever issues arise with stock holdings.

A bank official said, "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, even when there were major or minor incidents related to stocks in the market, if the fund's holding ratio of the stock was small, there was no decision to suspend fund sales," he explained.

The changed atmosphere is interpreted as stemming from the difficulties fund sellers faced during the private equity fund redemption suspension incident and the changed perception of consumers toward fund sellers 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 notification 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," he added.

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