FSS On-Site Inspection of KB Kookmin Bank "Concerns Over Hong Kong ELS Losses"

Next year, as the maturity of Hong Kong H Index-linked Equity-Linked Securities (ELS) sold by banks approaches, raising concerns about large-scale losses, the Financial Supervisory Service (FSS) has launched an on-site inspection of KB Kookmin Bank.

ELS are derivatives based on stock items and stock indices. They pay returns within a certain range, but if the loss threshold (Knock-In) is breached, principal loss occurs.

An FSS official explained, "Since there is a possibility of losses next year, this is an investigation rather than an inspection," adding, "Because Kookmin Bank sold the most, we are checking how the sales were conducted as a sample."

According to the office of Yoon Han-hong, a member of the People Power Party, the outstanding balance of ELS based on the H Index reached 20.5 trillion won as of the end of June. Of this, more than 16 trillion won was sold through banks, with KB Kookmin Bank holding the largest balance in the banking sector at 8.1972 trillion won as of the end of August.

The FSS is examining the sales decision process and elements of incomplete sales through the on-site inspection.

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