Woori Bank to unveil compensation for HSCEI ELS losses

[Courtesy of Woori Bank]

Woori Bank will unveil its voluntary compensation measures for customers who suffered losses from equity-linked securities (ELS) tied to Hong Kong‘s Hang Seng China Enterprises Index (HSCEI) within the week, taking the lead to announce such a measure among the ELS sellers.

Financial industry sources revealed on Tuesday that Woori Bank will report the expected losses from the HSCEI-linked ELS it sold at a board meeting scheduled for Friday and propose its voluntary compensation plan for the meeting to deliberate on. If the board’s deliberations and decisions go smoothly, Woori Bank could become the first in the banking industry to announce such a voluntary compensation plan.

Woori Bank reportedly has had the smallest sales of HSCEI-linked ELS among the major Korean banks totaling 41.3 billion won ($30.8 million), which means there is less pressure to compensate. Industry insiders estimate that Woori Bank‘s compensation amount could reach several billion won.

The bank’s voluntary compensation plan is expected to be announced shortly after Friday‘s board meeting and will include measures in line with the Financial Supervisory Service’s guidelines. The actual compensation amount is expected to be determined on an individual basis, starting with customers of the 4.3 billion won worth of ELS products that mature on April 12th, 2024.

Reports suggest that Woori Bank underwent a legal review to ensure it is not held accountable for embezzlement before finalizing the scheduled compensation plan. The bank‘s proactive approach to compensation is also thought to have been influenced by the Financial Supervisory Service’s approach to sanctions, which takes sales agents‘ endeavors to mitigate losses associated with the troubled HSCEI-linked ELS products into account.