"Compensate Full Principal Investment"… ELS Investors Hold First Rally in Front of Financial Supervisory Service

Over 150 Attend to Claim Incomplete Sales in Banking Sector
Urging Financial Authorities for "Strict Punishment of Selling Banks"

Investors in Hong Kong H Index-linked ELS (Equity-Linked Securities) products, who are expected to face large-scale losses in the first half of next year, have claimed incomplete sales by banks and demanded full principal compensation. They also submitted a petition to financial authorities urging strict punishment of commercial banks.

The “Hong Kong H Index ELS Victims’ Group,” composed of investors in Hong Kong H Index ELS products, held a rally on the 15th in front of the Financial Supervisory Service in Yeouido, Seoul, stating, “Commercial banks knowingly failed to explain the risk of losses to customers despite the high-risk nature of the products, violating the Financial Consumer Protection Act and unfairly selling ELS products,” and strongly urged, “We demand full compensation for damages caused by incomplete sales.”

About 150 ELS victims (estimated by the organizers) attended the rally. Despite the rain, wearing black raincoats and red headbands labeled “Incomplete Sales,” they held placards with slogans such as “Why sell derivatives without explaining loss risks?” and “Acknowledge incomplete sales and the violation of the Financial Consumer Protection Act in the subscription process,” shouting slogans like “Fully compensate the principal of incompletely sold ELS.”

[Image source=Yonhap News]

Most attendees were middle-aged and older adults. Hong Mo (56), a resident of Wangsimni, Seoul, said, “Since 2017, I gathered my retirement funds and invested in ELS products from four commercial banks,” adding, “I trusted the bank employees who said I could earn 1-2% more than regular deposits, but now I am at risk of losing my entire fortune and came out to express my grievance.”

Kim Mo (55, Pyeongtaek, Gyeonggi Province), who invested about 500 million KRW, said, “I went to the bank in 2021 to open a savings account but was told the risk of loss was very low and subscribed to the ELS product,” adding, “Since many maturities are concentrated between January and March next year, I attended the rally with anxiety.” A woman in her 50s living in Yongin, Gyeonggi Province, also lamented, “At the time of subscription, the bank did not sufficiently explain that it was a high-risk product, and I later realized that the investment preference and related documents, which subscribers are supposed to fill out, were arbitrarily checked by the bank.”

According to data submitted by the Financial Supervisory Service to the office of Oh Ki-hyung, a member of the National Assembly’s Political Affairs Committee from the Democratic Party, the outstanding balance of Hong Kong H Index-linked ELS sales by the five major commercial banks was 13.579 trillion KRW as of the end of November. Of this, 6.4541 trillion KRW (47.5%) was sold to elderly customers aged 60 and above. The outstanding balance sold to the super-aged group aged 90 and above also approached 10 billion KRW.

The victims’ group also strongly criticized the financial authorities responsible for management and supervision. They said, “Due to the negligence of the financial authorities, who should have thoroughly managed and supervised commercial banks, the damage has become solely the burden of the people,” and pointed out, “Not only did they belatedly recognize the seriousness of the situation, but they are still taking a passive stance, only watching cautiously.”

They raised their voices, saying, “The authorities must strengthen management and supervision of commercial banks that caused this situation, hold them accountable for incomplete sales, and take strong measures to prevent similar cases from happening again.”

According to the banking sector, the Hong Kong H Index-linked ELS maturing next year amounts to about 13.6 trillion KRW only at the five major commercial banks: KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup. Currently, the Hong Kong H Index is only half of its peak in 2021, and it is expected that cases of principal loss in ELS will surge.

[Image source=Yonhap News]

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