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Korea Federation of Banks Chair Cho Yong-byoung speaks during a press conference marking his 100th day in office at the association's headquarters in Seoul, Monday. (Korea Federation of Banks) |
Korea Federation of Banks Chair Cho Yong-byoung on Monday expressed regrets over massive losses inflicted on consumers who invested in derivatives products underlying a key Hong Kong stock market index, sold by local lenders.
Earlier in the day, the country’s regulator Financial Supervisory Service advised banks and securities firms to compensate for losses incurred from their incomplete sales of equity-linked securities products tracking Hong Kong's H Index. The total loss on such products is expected to reach 5.8 trillion won if the Hang Seng index fails to recover from the current slump until the end of this year.
“Regrettably, this kind of accident happened again although banks have been making various efforts for consumer protection,” Cho said during a press conference held to mark his 100th day in office.
The KFB, representing financial institutions conducting banking and related businesses in Korea, will continue to communicate with banks and financial authorities to prevent the recurrence of such cases by strengthening the internal control system of each lender.
Regarding Hong Kong ELS-induced discussions that banks should suspend the sales of high-risk and complex financial investment products, Cho said banks need to elevate the system and shift their focus to the asset management sector.
Noting that banks started sales of now-troubled ELS or private equity fund products as they sought alternatives to savings services during a low-interest era.
Calling asset management “the only way for survival,” in the digital era, Cho said it will provide portfolio solutions to individual customers and comprehensive debt and resource management to companies.
Cho, former chair of the country’s financial conglomerate Shinhan Financial Group, said that the KFB’s key role would be laying the foundation for banks to increase their ‘value.’
“We will strive to strengthen non-financial business, platform and digital capabilities, which are tasks for the future of banks, and create an environment to promote business diversification and overseas expansion,” he said.
