As large-scale losses are expected in equity-linked securities (ELS) that use the Hong Kong H Index as an underlying asset, and financial authorities have confirmed some misselling, the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) have banned the product. It was confirmed that the number of seniors in their 70s or older who invested exceeded 17,000.
According to data submitted by Maeil Business Newspaper on the 6th from the Financial Supervisory Service through People Power Party lawmaker Yoon Ju-kyung, a member of the National Assembly’s Political Affairs Committee, as of the end of November last year, 150,000 people had subscribed to ELS-related products with the H index as the underlying asset at the five major banks. There were 3,109 people. There were 17,067 people in their 70s or older, or 11.1% of the total. Of these, 1,228 people were in their 80s and 23 people were in their 90s or older.
There have been criticisms that banks have sold a large number of high-risk products to elderly people who do not have sufficient information or knowledge about derivatives. Lee Bok-hyeon, head of the Financial Supervisory Service, said, “(After conducting an on-site investigation), we are confirming cases of inappropriate sales to the elderly,” and added, “There is a need to reflect on whether financial companies are too busy paying fees that are immediately visible to them.” Rep. Yoon said, “The older people are, the greater the possibility of information asymmetry and incomplete sales, and because maturities are approaching day by day, financial authorities must quickly complete inspections and civil complaint investigations,” adding, “There is a need to reexamine the sale of high-risk products in banks.” “It does,” he claimed.
Mr. A, in his 70s, asked for a recommendation for a stable investment product to prepare for retirement, but claimed that a bank employee recommended the Hong Kong H-index ELS product, saying it was a “product that does not cause loss,” and changed his investment inclination arbitrarily. In addition, Mr. B, a man in his 80s, signed up for the product through one of the five major commercial banks to manage his retirement funds, but he claimed that he did not sign the subscription document himself and that a bank employee signed on his behalf.
However, the age group that invested the most in Hong Kong H Index ELS products at the five major banks was those in their 50s and 60s. Investors in their 50s accounted for the largest proportion at 30.6% (46,790 people), and those in their 60s accounted for a similar amount at 29.5% (45,231 people). Those in their 40s were 15.3% (23,478 people), and those in their 20s were 5% (7,724 people). There were 2,541 people under the age of 20. Minors cannot sign up for ELS-related products on their own and must be represented by their parents or guardians.
The Hong Kong H Index, which exceeded the 12,000 mark in February 2021, is showing weakness, falling to the 5,300 level on the 5th, causing losses in related ELS. The balance of Hong Kong H-index ELS sales across the financial sector as identified by the Financial Supervisory Service is KRW 19.3 trillion, and KRW 15.4 trillion, or 79.6% of the total balance, is due to mature this year. The volume maturing in the first half of the year also amounts to 8.4 trillion won. As of the 5th, the confirmed loss of Hong Kong H Index ELS at the five major banks amounted to 471.5 billion won. If the H index stays at the 5,300 level, a loss of 4.2 trillion won is expected to occur in the first half of this year alone.
It was found that the five major banks earned 314.8 billion won in fee income from ELS-related products alone with the H index as the underlying asset over a four-year period from 2020 to the end of November 2023. By bank, KB Kookmin Bank, which sold the most ELS-related products, earned KRW 183.4 billion from the sale of H-index ELS products alone, followed by Shinhan Bank (KRW 51.6 billion), NH Nonghyup Bank (KRW 43.4 billion), Hana Bank (KRW 35.8 billion), and Woori Bank (KRW 35.8 billion). 600 million won) followed.
There were also cases where large sums of tens of billions of won were invested in the Hong Kong H Index ELS. According to data submitted by Rep. Yoon from the Financial Supervisory Service, an individual investor invested 42.4 billion won in ELS with the H index as the underlying asset in 2021. 2021 is the time when the H index rises to 12,000, and if this investor does not repay at maturity, he will suffer a loss of about 20 billion won. In 2020, one individual burned 37.3 billion won worth of ELS products. It is evaluated that it is unusual to ‘spend’ this amount of money on derivatives. [박인혜 기자 / 박나은 기자 / 유준호 기자]
2024-02-07 20:30:47
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