South Korea Financial Services Commission to decide Hong Kong ELS sanctions

The South Korean Financial Services Commission is scheduled to deliberate and finalize sanctions regarding the mis-selling of Hong Kong H-index equity-linked securities (ELS). The final fine for the involved banks is expected to be in the high 300 billion won range, a significant reduction from the approximately 600 billion won previously estimated by the Financial Supervisory Service.

Banks are managing these potential penalties through various accounting methods for loss provisions. While Shinhan Financial Group and SC First Bank have already recognized the reversal of certain provisions due to lowered expected costs, KB Financial Group and Hana Financial Group have maintained different reserve levels. The final impact on bank earnings will depend on the gap between the confirmed sanctions and the provisions already recorded by each institution.

The decision follows a nearly two-year investigation into the sales practices of 11 banks. While the final sanction amount may be lower than initial estimates, some banks may still pursue legal action through administrative litigation.