KIS: ₩1.6 Trillion in Treasury Bond Bid-Rigging Fines; an “Earnings Shock” Is Inevitable for Securities Firms

[Financial News] Fines in the range of ₩1.6 trillion for bid-rigging in Korean Treasury bond auctions are expected to place a considerable burden on domestic securities firms’ earnings this year. While some firms have already recognized the full fines as provisions, other financial institutions are increasingly likely to book related expenses within the year. However, analysts say the direct impact on creditworthiness will be limited, as major securities firms have maintained a certain level of capital strength and earnings buffers.
Yoon So-jung, a senior researcher at Korea Investors Service (KIS), said in a report on the 11th titled “KIS’s View on the Fair Trade Commission’s Sanctions Related to Korean Treasury Bond Bid-Rigging” that “profitability could decline considerably in 2026, particularly at financial institutions facing large fines.” She added that “given that the fines amount to 0.0–4.2% of each financial institution’s equity, their direct impact on capital adequacy will generally be limited.”
The Korea Fair Trade Commission decided that day to impose total fines of ₩1 trillion 626 billion 575 million on 10 securities firms and five banks that took part in bid-rigging in Korean Treasury bond auctions. Securities firms account for ₩1 trillion 376 billion 29 million, or 84.6%, of the total fines.
Among the securities firms, KB Securities received the largest fine, at ₩332.178 billion. It was followed by NH Investment & Securities at ₩242.785 billion, Mirae Asset Securities at ₩214.83 billion, Shinhan Investment & Securities at ₩147.306 billion, Daishin Securities at ₩120.051 billion, and Samsung Securities at ₩118.86 billion.
The burden of the fines is substantial, particularly when compared with each firm’s annual net profit. According to KIS, the fine against KB Securities amounts to 54.2% of its net profit last year. The figures are 41.0% for Shinhan Investment & Securities, 36.1% for Mirae Asset Securities, and 26.7% for NH Investment & Securities.
In its preliminary results for the third quarter of this year, KB Securities booked the full ₩332.2 billion fine as a provision. With the Korea Fair Trade Commission’s decision clarifying the amounts, other financial institutions may also recognize related expenses in either the third or fourth quarter.
Researcher Yoon said the fines were unlikely to directly lead to credit rating downgrades or a deterioration in capital soundness. According to KIS, the fines represent 0.0–4.2% of each financial institution’s equity. The ratio is highest at KB Securities, at 4.2%, followed by Daishin Securities at 2.6%; NH Investment & Securities and Shinhan Investment & Securities at 2.5% each; and Mirae Asset Securities at 2.0%.
Another positive factor is that major securities firms have built up a certain level of earnings buffers on the back of solid first-half operating results. KIS added, “However, as the operating environment is becoming less favorable in the second half, pressure on profitability could intensify if additional expenses related to the fines are recognized.”  
KIS plans to closely monitor the final fine amounts for each financial institution, the timing of provisions, the progress of appeals, and changes in second-half performance and capital adequacy. It also plans to factor into its credit assessments the indirect effects of reputational risks and internal-control burdens arising from the fines on each institution’s business base and standing with external stakeholders.

[email protected] Kim Hyun-jung Reporter