Woori revamps private banking service

Lender to introduce 'one-strike-out' policy for private bank specialists caught misselling

Song Hyun-ju, head of Woori Bank's asset management group, speaks during a press conference at the bank's headquarters in Seoul. (Woori Bank)

Woori Bank, South Korea's fourth-largest commercial lender, is enhancing its private banking services to solidify its reputation as a trustworthy institution for clients.

In a press conference Thursday, the bank unveiled its renewed commitment to expanding its presence in the asset management sector amid ongoing trust issues within the banking industry.

With this vision, Woori Bank has assembled a team of experts spanning various sectors, such as tax, foreign exchange and real estate. The lender is also launching its artificial intelligence-based market prediction system, "Wise," to offer tailored consultancy services that precisely meet the unique requirements of individual clients.

Furthermore, the bank intends to significantly increase the number of its centers specializing in asset management to reach 20 within the next three years.

Operating under the name Two Chairs, Woori Bank's private banking group, which caters to high-net-worth individuals, currently operates six centers in affluent areas of Seoul, including Gangnam and Cheongdam. Recently, it inaugurated its first center outside of Seoul in Busan, with plans for nationwide expansion.

While boosting the expertise of its private bankers through exclusive training under the company's career development program, the lender will also tighten regulations on asset management and sales.

According to Song Hyun-ju, head of Woori Bank's asset management group, the bank plans to introduce a "one-strike-out" penalty system, a first among local banks.

"We will demonstrate zero tolerance for misselling and unethical sales practices. Under this principle, we will implement a one-strike-out system that results in the immediate dismissal of private banker qualifications upon the discovery of such behaviors," Song emphasized.

Song Hyun-ju, Woori Bank's head of the asset management group, speaks during a press conference about the bank's asset management service held at the bank's headquarters in Seoul. (Woori Bank)

Currently, the bank employs approximately 640 private banking specialists dedicated to selling products for private banking and investment.

Additionally, the bank is implementing a more intricate self-inspection process for customers before purchasing high-risk products. Following contract signing, customers will receive detailed risk precautions through a video presentation within one day. Confirmation of the purchase will occur three days after signing, upon which the contract will be activated.

Woori's announcement coincides with ongoing concerns in the local finance sector regarding the alleged misselling of equity-linked securities connected to Hong Kong's sagging Hang Seng China Enterprises Index. South Korea has already confirmed nearly 1 trillion won ($750 million) in losses from these products, with the figure forecast to escalate throughout the year.

Following a significant backlash after past incidents involving the misselling of high-risk derivative products, it was revealed that Woori Bank had sold the least amount of HSCEI-linked ELS products and remains the sole bank still offering the product. Other banks have temporarily suspended sales as authorities investigate potential instances of misselling.

While Song acknowledged an inevitable reduction in ELS product sales across banks, she stressed Woori Bank's commitment to customer-focused sales strategies.

"We aim to prioritize sales based on the customer's portfolio rather than specific investment products. This approach entails recommending a variety of products, including ETFs, funds and bonds," she explained.

Earlier in January, Woori Financial Group Chairman and CEO Lim Jong-Yong emphasized the bank subsidiary's role in leading the recovery of public trust in the overall sector, while laying the foundation for its transition into an asset management bank.

By Choi Ji-won(jwc@heraldcorp.com)