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Banks’ private equity funds sold to investors dip 37%

Derivative-linked fund fiasco weighs down on investor sentiment


Amid the ongoing controversy regarding the improper sales of derivative-linked products by Korean commercial banks, investors in local lenders’ private equity funds have dipped nearly 37 percent, data compiled by a market operator showed Tuesday.

According to the Korea Financial Investment Association, the number of private equity fund accounts sold by local commercial banks tallied 37,409, as of end-December last year. The figure was down 37.1 percent from six months prior.

Since July 2019, more than one-third of local fund operator Lime Asset Management’s now-frozen private equity funds had been sold via local commercial banks, including major players such as Woori Bank and Hana Bank.

Of the total amount of DLF sales by Lime Asset, 34.5 percent, or 2 trillion won ($1.72 billion), was sold through banks. Woori and Hana sold 1.07 trillion won and 193.8 billion won, respectively.

Woori saw its private equity fund account number fall precipitously by 54.9 percent, to 7,094 from 15,727 during the second half of last year. The corresponding figure for Hana also dropped 41.5 percent, to 9,334 from 15,996 during the same period.

Lenders saw their private equity fund balance plummet 12.5 percent to 25.34 trillion won during these six months.

Marking a contrast from commercial banks, the number of private equity fund accounts sold from local brokerage firms and insurance companies increased.

Brokerage firms sold 84,593 private equity fund accounts by the end of December last year, up 5 percent from the end of June in the same year. While insurance companies marked 1,259, jumping 15.9 percent, in the given period.

By amount, securities firms’ private equity funds had sold 336.72 trillion won at end-December last year, nearly 9.4 percent up from the end of June. Insurance firms’ private equity funds sold also jumped by 16.6 percent, marking 41.78 trillion won.

By Jie Ye-eun (