Woori Industrial Bank, Lime Fund 65-78% compensation

Input 2021.02.24 10:00

Basic compensation ratio 55% for us, 50% for companies
Both of them promote self-regulation with a 40-80% compensation ratio

The Financial Dispute Mediation Committee under the Financial Supervisory Service (the Sub-Committee) has responded to three consumer disputes arising from the incomplete sale of Lime Asset Management’s Lime Asset Management private equity fund (Lime Fund), which caused financial fraud and massive losses. They decided to indemnify 78%. In addition, the basic compensation ratio of the Lime Fund sold by the two banks was determined to be 55% for Woori Bank and 50% for IBK Bank, respectively. Financial consumers who incur a loss by joining the Lime Fund at both locations are compensated for the principal by adding or subtracting them based on the basic compensation ratio.

On the 24th, the Bunjo Committee decided on the compensation ratio for consumer disputes over three Lime Funds sold by Woori Bank and IBK. The compensation ratio was 65-78%. The decision on the compensation ratio is the first dispute settlement over the bank’s lime fund sale. Other banks that sold Lime Funds, such as Shinhan Bank, are likely to use this standard to compensate.

Woori Bank decided to compensate 78% for selling Lime Fund to an 82-year-old man who wanted principal guarantee. The man said that he was engaged in the cement manufacturing industry in his old age, and said that he had to preserve the investment capital no matter what, but said that the Lime Fund was safe and that Woori Bank joined it. It also decided to compensate 68% of the sale of lime funds to asphalt concrete manufacturers who want a safe investment product. In the case of IBK, retirees in their 60s with no investment experience joined the Lime Fund, and it was admitted that they did not explain the investment risk, so they decided to compensate 65%.

Meanwhile, the basic compensation ratio, which is the basis for determining the compensation ratio, was determined by Woori Bank at 55% and Industrial Bank at 50%, respectively. With this in mind, the Committee will add or subtract the compensation ratio in consideration of the situation for each individual dispute. The Bunjo Committee explained that “30% was applied in the same manner as the corporate draft (CP) and corporate bonds of affiliates of Dongyang Group in 2014, the Overseas Interest Rate Linked Debt Consolidation Fund (DLF) in 2019, and the 2013 KT ENS Trust Fraud Case.” In addition, each bank added 25% for Woori Bank and 20% for IBK.

Here, the reasons for the increased responsibility of the bank and the reasons for the investor’s self-responsibility are added or subtracted for each investor. Initially, both inside and outside the financial world expected the basic compensation ratio to be around 50-70%. It is set slightly lower within the expected level.

However, there is a high possibility that the compensation ratio will increase in the actual dispute settlement process. This is because the majority of Lime Fund subscribers through banks have a strong tendency to guarantee principals to the elderly. A financial official said, “Bank customers are much more stable-oriented investors than securities companies,” and said, “In most cases currently in dispute, there will be a lot of reasons for the increased compensation ratio.”

The subcommittee plans to make self-adjustment at a compensation ratio of 40-80% according to the compensation standard set this time. However, corporations set the compensation ratio at 30~80%. Woori Bank and IBK agreed on a post-settlement method in which the entire unpaid amount is regarded as the amount of damage and compensated in advance. Accordingly, Woori Bank will be compensated for 182 cases worth 270 billion won, and IBK will be compensated for 20 cases worth 29 billion won.

As of the 15th, the number of applications for dispute settlement related to Lime Fund was 351 for banks and 331 for securities firms. The Lime Fund, whose redemption was postponed, totaled 1.67 trillion won. In banks, Woori Bank (360 billion won), Shinhan Bank (280 billion won), Hana Bank (87 billion won), Busan Bank (53 billion won), Industrial Bank (29 billion won), Kyungnam Bank (28 billion won), Nonghyup (9 billion won). Sold a lot.

Meanwhile, the Committee clarified in the mediation decision that the Lime Fund-related investigation is currently underway, and that it can be readjusted by canceling the contract according to future investigations and trial results.