Seoul: Five banks were notified by the financial watchdog Friday of penalties totaling around 2 trillion won (US$1.37 billion) related to their mis-selling of equity-linked securities (ELS) products tied to Hong Kong's H Index, informed sources said. These banks, which include KB Kookmin Bank, Shinhan Bank, Hana Bank, NH Nonghyup, and SC Korea, were already facing significant losses after compensating customers for the mishap.

According to Yonhap News Agency, the Financial Supervisory Service (FSS) issued a penalties notice to the aforementioned banks. The final decision regarding the penalties will be made by the Financial Services Commission (FSC) at a later date, as per local industry sources.

Banks and brokerages have collectively sold 19.3 trillion won worth of ELS products linked to Hong Kong's H index since 2021, the FSS stated. ELS are hybrid securities whose returns are connected to the performance of underlying equities, such as a stock index.