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[Alpha Biz=(Chicago) Reporter Kim Jisun] Regarding Woori Bank's loss of equity-linked securities (ELS) derivatives, the trading department manager is also expected to be disciplined along with the dealer.
"Woori Bank had a problem in trading goods without market prices for risk hedge," a Financial Supervisory Service official said on the 9th. "An error occurred in the process of estimating the price through the evaluation model (because there is no proper market price)." The official added, "(Woori Bank) will first hold the dealer responsible for the price evaluation, and then the managers above will be disciplined the same."
Woori Bank has hedge deals with securities firms that issue ELS It made a total valuation loss of 96.2 billion won. In June, we found these errors through our own risk management inspection and reported them to the FSS. They are losses unrelated to customers.
In the meantime, Woori Bank received and sold ELS products made by securities companies. In the process, he made hedge deals with other financial companies. This is to reduce ELS-related risks that are heavily affected by market volatility. There is no market price for the product for hedge trading As I see it, I set the price with the evaluation model.
Although the price of hedge products was set as an evaluation model, it is highly likely that losses snowballed as they went beyond the scope of the evaluation model.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
