Hong Kong ELS penalty 1trillion4,000billion won reduced to 6,000billion won; bank stocks strengthen

The Financial Supervisory Service reduced the penalty for mis-selling Hong Kong H Index-linked equity-linked securities (ELS), which had previously been proposed at around 1trillion4,000billion won, to 6,000billion won. The FSS plans to organize the related details and the reasons for the reduction and issue prior notice to the banking sector next week. The final sanctions are expected to be finalized in 7.

Bank stocks broadly strengthened together after the reduction plan became known. The banking sector is preparing for the prior-notice procedure. Banks are internally working on customer guidance and loss estimates.

Separately, a bill is under discussion to impose a penalty equivalent to 3% of revenue in the event of a personal-information breach in the financial sector. The bill contains provisions specifying financial companies' information-management obligations and sanction standards. Further discussions are under way, including the impact on domestic and overseas operators.

The Financial Supervisory Service has decided to establish a cooperation framework with the Korea Banking Institute and 8financial holding companies. The relevant institutions plan to expand collaboration centered on consumer protection education and handling consumer complaints. Key financial-sector officials attended the signing ceremony.

The Financial Supervisory Service and financial companies are proceeding with follow-up procedures following the mitigation of the proposed sanctions related to ELS and legislation concerning personal information. The relevant institutions are coordinating the schedules for prior notification, bill deliberation, and final measures. Investors and consumers need to check related announcements.