Shinhan Bank CEO Jin Ok-dong (Yonhap)
The country’s two major lenders Shinhan Bank and Woori Bank have come under scrutiny again over their sale of unsound products of scandal-ridden Lime Asset Management after being called to a financial watchdog’s meeting that would decide the fate of their top executives.
The Financial Supervisory Service held its second sanctions committee meeting Thursday to decide the level of sanctions for Woori Bank, Shinhan Financial Group and Shinhan Bank, major sellers of Lime funds that incurred financial losses of some 1.6 trillion won ($1.42 billion) for about 4,000 retail investors.
No announcement about the committee‘s decision had been made as of press time.
The FSS held the meeting to give the firms a chance to explain or defend themselves before finalizing punitive actions for Sohn Tae-seung, currently chairman of Woori Financial Group, and Shinhan Bank CEO Jin Ok-dong.
In February, the authority sent prior notice of tough sanctions to the two executives in which Sohn, former chief executive of Woori Bank, was informed that he may be suspended from his duties while Jin received a reprimand warning that restricts executives from getting new jobs in the finance sector for the next three to five years.
The FSS is accusing them of being lax in overseeing sales of troubled funds and misguiding investors.
In a bid to receive lighter punishments, the two banks have decided to shoulder some burden of the heavy losses that their customers have had to suffer.
On Monday, Woori said it would accept the arbitration proposal put forward by the FSS to pay compensation worth approximately 40 percent to 80 percent of the principal put down on suspended Lime funds in a bid to protect their customers.
Shinhan Bank also said that it would offer compensation worth 50 percent of the principal invested in Lime’s Credit Insured 1 trade fund. Shinhan had sold 276.9 billion won worth of the fund.
An array of banks and brokerage firms have been facing disciplinary actions after Lime Asset Management came under FSS investigation since July 2019 for having concealed massive losses and inflated investment returns to maintain its customer base.
By Park Han-na (firstname.lastname@example.org