Hana Bank to Discuss ELS Voluntary Compensation at Special Board Meeting on the 27th

by Choi Seoyoon

Published 20 Mar.2024 19:05(KST)

Updated 21 Mar.2024 07:20(KST)

Hana Bank will initiate voluntary compensation for customer losses related to Hong Kong H Index (Hang Seng China Enterprises Index·HSCEI) equity-linked securities (ELS).

According to the financial sector on the 20th, Hana Bank will hold an extraordinary board meeting on the 27th to discuss the voluntary compensation plan for the Hong Kong H Index ELS. It is expected that Hana Bank will announce the voluntary compensation plan once the board's review and resolution are completed.

Woori Bank also plans to report the maturity schedule and expected loss scale of the H Index ELS at the board meeting on the 22nd and submit matters related to voluntary compensation for discussion.

Woori Bank is known to have confirmed the initial legal review result that there is no risk of breach of trust charges even if the management or the board decides on voluntary compensation. KB Kookmin Bank is also conducting a full investigation on the sold ELS.

The scene of the press conference for victims of the Hong Kong Index ELS held in front of the Korea Federation of Banks Building in Jung-gu, Seoul on the 18th [Image source=Yonhap News]

Earlier, the Financial Supervisory Service (FSS) presented dispute mediation guidelines on the 11th in response to the large-scale losses incurred from the H Index ELS.

The FSS anticipated that the maximum compensation ratio that sellers must bear could reach 100%, but most cases are expected to fall within the 20-60% range.

On the 13th, FSS Governor Lee Bok-hyun apologized to reporters regarding the supervisory authority's responsibility and emphasized that voluntary compensation by banks is not a breach of trust.

At that time, Governor Lee said, "The dispute mediation guidelines were prepared by selecting factors recognized by precedents to achieve judicial results equivalent to those without going through judicial procedures, thus having a legal basis," and added, "Having worked on breach of trust-related tasks for over 20 years, sharing the burden with consumers is far from being a breach of trust issue."