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SEOUL, April 23 (Yonhap) -- The financial watchdog said Wednesday it plans to discipline Woori Bank Co. for selling an investment product with omitted information that may have misled investors about potential risks.
The product, which Woori Bank sold in 2007, was linked to a 2.4 trillion won (US$2.3 billion) development project to build a large trade center called Pi City in southern Seoul. The lender collected 190 billion won from 1,400 investors, promising a dividend of 8 percent.
The development project was launched in 2003, but it has limped along for more than 10 years due mainly to a financial slump in the local construction industry. Many high-profile officials from the previous Lee Myung-bak government were indicted for receiving kickbacks in return for helping the project's organizer win permits.
After a special inspection of Woori Bank, the Financial Supervisory Service (FSS) discovered that to "some extent," Woori Bank had not elaborated fully on the risks and dangers of losses in the Pi City investment, watchdog officials said.
But the FSS concluded that the bank did not intentionally deceive its clients, as was the case with Tongyang Securities, which had sold high-risk financial products fully knowing the company linked to the products would be unable to repay maturing debts.
"It's not appropriate to say that it was a deceptive act, but we will reprimand the bank and related officials as there were some problems in selling financial products linked to the Pi City project," said an FSS official.
Activist groups had argued that Woori Bank did not give suitable advice to investors, omitting the characteristics and the viability of the project. The bank refutes those allegations.
The FSS recently pledged to look into all practices of local banks and other financial firms after their recent data breaches and embezzlement scandals.
Woori Bank was reprimanded and fined for engaging in money laundering, and its Tokyo office is under FSS investigation for reportedly extending billions of won worth of illegal loans and operating slush funds.
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