Sales of derivatives-linked securities in Korea inched down during the third quarter of the year, data showed Monday.
Investors in Hong Kong-tied derivative products may recoup 30-65% of their losses after committee arbitration.
Shinhan, Hana, Woori and KB all reported an on-year drop in earnings for the first quarter, driven largely by compensation reserves for Hong Kong-tied derivative products.
Other banks including KB Kookmin, Woori and HN Nonghyup are set to follow suit, but it appears to be taking some time for them to come up with their compensation plans for their Hong Kong-tied ELS investors.
The biggest seller of the troubled derivative products, KB Kookmin, and Shinhan announced that they would implement a voluntary compensation scheme on Friday.
The bank will set up a committee to oversee the compensation, which will accord with the guideline issued by the country's financial regulator.
Hana Bank's board of directors agreed to initiate compensation for losses incurred through its sales of derivative products linked to a Hong Kong index.
Woori Bank will compensate losses from the sale of Hong Kong-tied ELS, following guidelines set forth by the Financial Supervisory Service.
Woori Bank may compensate investors in Hong Kong-tied derivative products for an average of 40 percent of their losses. Other banks could face larger financial burdens due to their high sales volume of the securities.
The chief of the KFB expressed his “regret” over the incomplete sales of high-risk investment products by banks, as the financial watchdog put forward a compensation guideline for losses incurred from the troubled Hong Kong-tied derivatives Monday.
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