Woori Financial Group Inc. and KEB Hana Bank are facing the possibility of a regulatory inspection into the alleged misselling of derivatives-linked funds, The Korea Times reported Aug. 18.

The two banks allegedly provided misleading information on investment yields on the funds. South Korea's Financial Supervisory Service is set to inspect the two banks later in the week of Aug. 19.

Woori Financial and KEB Hana have sold an estimated 1 trillion won worth of DLFs from March through May. The funds have come under scrutiny as they are comprised of derivative-linked securities that have been tied to yields on Treasury bonds of Germany, the U.K. and the U.S. Investors are facing a loss in principal as German bond yields have fallen in line with economic contraction in the country.

As of Aug. 16, US$1 was equivalent to 1,206.26 South Korean won.