KB Kookmin Bank to unveil voluntary ELS compensation

[Photo by Yonhap]

KB Kookmin Bank, one of South Korea’s top five banks, will finalize its policy regarding voluntary compensation for losses from equity-linked securities (ELSs) tied to Hong Kong’s Hang Seng Index as early as this week.

According to sources from the financial sector on Sunday, KB Kookmin Bank plans to hold an ad-hoc board meeting this week to decide whether to accept the settlement standards proposed by the Financial Supervisory Service (FSS) on March 11.

“The decision to accept the compensation proposal has been delayed due to the extraordinary scale in the ELSs sold by the commercial bank and recent changes among its board members,” said a source.

KB Kookmin Bank will focus on preparing for voluntary compensation for losses brought on by the ELS sales worth 5.2 trillion won ($3.8 billion) between January and July 2021, a period marked by a surge in the Hang Seng index.

The bank plans to consider a loss ratio of 50 percent and structure estimated liabilities of around 1 trillion won.

The industry expects the total liabilities banks are required to build to reach 2 trillion won.