S.Korea to probe interest rate derivatives sales

Woori Financial

19/08/2019 11:10

SEOUL, Aug 19 (Reuters) - South Korea's financial regulator
said on Monday it would investigate interest rate derivative
products sold by banks and brokerage firms that put investors at
risk of losing nearly all their money.
    Some 822.4 billion won ($679.8 million) in derivatives
linked to overseas interest rates and sold mainly to retail
investors were at risk, the Financial Supervisory Service said
in a statement.
    It cited one product linked to 10-year German government
bond yields.
    "If the interest rates (on the German bonds) remain at the
current level until the maturity of the products falling between
September and November, the average rate of loss will reach
95.1% when excluding gains from coupon payment," the regulator
said.
    These and other products were sold by Woori Bank, KEB Hana
Bank, Kookmin Bank and three domestic brokerage firms to 188
corporate clients and 3,654 retail investors, who hold most of
the derivatives.  
    The three banks did not immediately return calls from
Reuters seeking comment.
    The regulator said its probe would begin this month and it
gave no further details about the investigation.
    
($1 = 1,209.7200 won)

 (Reporting by Choonsik Yoo; editing by Darren Schuettler)
 ((choonsik.yoo@thomsonreuters.com; +822 6936 1464;))