Woori Financial Group, South Korea’s fourth-largest financial holding company, will reinforce its wealth management service for high-net-worth individual clients despite growing controversy over local banks’ repeated reckless sale of high-risk financial products, said its chairman.
“Trust and reliability lie at the heart of banking services. This year will be the first year laying the foundations for Woori Bank’s successful transition into a wealth management bank,” Woori Financial Chief Executive Officer and Chairman Yim Jong-yong told bankers at Woori Financial’s private banking center in affluent Gangnam in Seoul on Wednesday.
Dubbed Two Chairs Exclusive (TCE) Center, the place offers asset management services for super-rich clients with more than 1 billion won ($750,000) in assets each. The Gangnam center in Seocho manages funds worth about 1 trillion won in total for its clients.
Yim unveiled an ambitious goal to expand the financial group’s presence in the wealth management sector at home and abroad to catch up to bigger rivals.
In three years, Woori Bank will open a total of 10 wealth management-dedicated banks across Korea including Seoul, Busan and Daegu despite the latest trend of closing brick-and-mortar banks amid accelerated digitalization.
It has recently opened the first of its kind in Marine City, Busan.
RESTORING TRUST
Yim emphasized the importance of restoring clients’ trust as the Korean financial industry is embroiled in a misselling controversy with equity-linked securities (ELS) tracking the Hang Seng China Enterprises Index (HSCEI), which could dampen wealth management demand in the country.
However, Woori Bank is not one of the five banks under FSS scrutiny.
Woori Bank sold 8.2 trillion won worth of equity-linked trust (ELT) products for two years from 2021, but its sale of HSCEI-linked ELS products stood at only 60.1 billion won.
After the bank learned a lesson from its previous negligent sale of high-risk derivative-linked funds (DLFs) that left many investors with huge losses, it has set a strict guideline to limit the sale of HSCEI ELS products to only 5% of its total ELT sale value, Yim said.
Kookmin Bank, NongHyup Bank, Shinhan Bank, Hana Bank and Standard Chartered Bank of Korea are facing the Korean financial authorities’ investigation for the possible misselling of HSCEI-tied ELS products.
“We should be armed with not only strong internal control guidelines but also high moral standards,” said Yim, asking private bankers to stay at the forefront of guarding credibility.
Yim became Woori Financial Group chairman last year.
