2024-01-14 18:02:43
All commercial banks recorded a loss rate of 50.7%.
The principal must be recovered when the H index exceeds 8000.
Financial sector “concerned about losses exceeding KRW 5 trillion”
▲ Hong Kong ELS The ELS situation that was feared is becoming a reality, with principal losses exceeding 100 billion won confirmed in the Hong Kong H Index stock-linked securities (ELS) products sold by major commercial banks this year.
According to the banking industry on the 14th, there was a principal loss of 106.7 billion won in Hong Kong ELS products sold by major commercial banks (KB Kookmin, Shinhan, Hana, and NH Nonghyup Bank) as of the 12th of this year. Since the first loss of 4.4 billion won in ELS sold by KB Kookmin Bank was confirmed on the 8th, the loss has well exceeded 100 billion won in five days. The total principal amount maturing during this period was 210.5 billion won, of which only 103.8 billion won was repaid, resulting in an overall loss rate of 50.7%. Some products showed loss rates of up to 52.1%.
What is currently problematic is the 3-year maturity ELS product issued after early 2021, when the H index was at its highest point. ELS pays a certain amount of profit if individual stocks and indices stay within a certain range, but if it falls below the range where principal loss occurs (knock-in), there may be a loss of principal. The problem is that the Hong Kong H Index has halved since 2021, when the product was sold. The index must immediately exceed the 8,000 level for investors to get their principal back, but it is currently moving sideways in the mid-5,000 range (5,481.94 as of the 12th).
According to the Financial Supervisory Service, the total ELS sales balance in the financial sector as of November 15 last year was 19.3 trillion won, and 15.4 trillion won, or 79.6% of the total balance, will mature this year. By quarter, it was 3.9 trillion won in the first quarter of this year and 6.3 trillion won in the second quarter, reaching 10.2 trillion won in the first half of this year alone. For this reason, there are concerns in the financial world that the principal loss of Hong Kong ELS sold by the five major banks will exceed 5 trillion won.
The Financial Supervisory Service has been conducting on-site inspections of 12 major ELS sellers linked to the Hong Kong H Index since the 8th. Starting with the largest sellers, KB Kookmin Bank and Korea Investment & Securities, we plan to check for incomplete sales. As large-scale principal losses are confirmed, consumer complaints are pouring in. As of the 12th, the total number of Hong Kong ELS-related complaints filed with the five major banks reached 1,410, of which 518 were filed this year.
Reporter Gyu-sang Yoo
1705258067
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