South Korea’s top five commercial banks have earned nearly 2 trillion won (US$1.67 billion) in fees on sales of derivative products over the past five years.
Kookmin, Shinhan, Woori, Hana and Nonghyup Bank received 1.98 trillion won (US$1.65 billion) in commissions on sales of derivate products from January 2015 to early August this year, according to the data submitted by the Financial Supervisory Service (FSS) to Rep. Koh Yong-jin of the ruling Democratic Party on Sept. 30.
The five banks sold a total of 4.60 million derivative products worth 208 trillion won (US$173.62 billion) over the same period. Kookmin Bank led derivatives sales with 75 trillion won (US$62.60 billion). Next came Hana Bank with 52 trillion won (US$43.40 billion), Shinhan Bank with 35 trillion won (US$29.21 billion), Woori Bank with 32 trillion won (US$26.71 billion) and Nonghyup Bank with 14 trillion won (US$11.69 billion).
Hana Bank and Woori Bank sold the most number of derivatives-linked fund (DLF) products based on interest rates in other countries which have recently caused controversy over a large scale of losses. The two banks sold 4.06 trillion won (US$3.39 billion) worth of DLF products from last year, accounting for 85 percent of the total sales. Their commission fees for the DLF sale came to 39.70 billion won (US$33.13 million), taking up 94 percent of the total.
Meanwhile, the FSS is planning to make an interim announcement for the joint investigation into banks, securities companies and asset management firms on Oct. 1. In the interim announcement, it will disclose financial companies’ design structure of DLF products and internal decision-making systems and decide on whether they have committed in incomplete contracts.