This article was displayed on the ChosunBiz RM Report website at 10:42 a.m. on Oct. 27, 2025.
The Fair Trade Commission will again review next month the alleged collusion over the loan-to-value ratio (LTV) by the four major commercial banks (KB Kookmin, Shinhan, Hana, Woori). It comes about a year after last year's decision to "re-examine," with a final decision on sanctions expected within the year. With talk of a possible penalty surcharge in the trillions of won, tension is mounting in the financial sector ahead of the conclusion.
According to reporting compiled by ChosunBiz on the 27th, the Fair Trade Commission plans to hold plenary sessions on Nov. 19 and 26 to deliberate the alleged LTV collusion case involving the four major banks. The upcoming plenary sessions are expected to focus on additional verification issues raised after the plenary held in Nov. last year.
The Fair Trade Commission believes the four banks shared LTV information and restricted loan competition. The logic is that although banks could have extended more loans, they lowered the collateral recognition ratio, reducing consumers' loan limit and, as a result, increasing interest burdens.
According to materials secured by the Fair Trade Commission, the banks exchanged more than 20,000 pieces of LTV information in hard copy rather than by email. They also engaged in internal exchanges such as "Because of the collusion issue, we couldn't send files and wrote everything by hand," and used the expression "We'll win-win on the back end." Examiners view this as "evidence of organized information exchange."
The banking sector, however, maintains there was no intent to collude. A commercial bank official said, "LTV figures are only reference numbers to manage risk within government regulatory limits (50% in speculative areas, etc.) and do not directly affect the final loan limit or interest rate," adding, "With competition fierce among banks, there is no reason to intentionally lower the collateral ratio."
The core issue in the LTV collusion case is whether the banks gained unfair profits through the information collusion the Fair Trade Commission alleges. The banks argue that sharing information related to LTV was customary for risk management. Their logic is that lowering the LTV reduces the loan limit, giving banks little incentive to collude.
Earlier, in Feb. 2023, former President Yoon Suk-yeol ordered officials to "craft extraordinary measures to resolve oligopolies in finance and telecommunications and to promote competition," after which the Fair Trade Commission launched a related investigation. At the time, some interpreted the backdrop as a political goal of "improving the financial sector's monopolistic structure." This second-round plenary will test how that trajectory leads to a conclusion under the new administration.
The key question is whether the Fair Trade Commission can prove that information exchange among banks had a meaningful impact on actual limits and rates, leading to consumer harm. After deciding to re-examine the case last year, the agency conducted supplemental probes and rewrote its review report in Apr. this year. With the scope for calculating related revenue expanded, there are projections that the penalty surcharge could exceed 1 trillion won. However, since the commission withdrew its referral for prosecution at the first meeting last year, proving the "requirements for collusion" is likely to be decisive.
In this re-examination, the Fair Trade Commission is said to have focused on proving the competition-restricting nature of the alleged collusion. Since the key issue raised at last year's plenary was whether "information exchange among banks actually restricted market competition," the supplemental probe is understood to have centered on reexamining the overall competitive structure of lending, including corporate loans. It is also understood that some additional evidence has been secured to support the impact of information sharing on market price formation. Based on this evidence, the commission is expected to again judge at the plenary whether the exchange of LTV information led to a substantive restriction of competition.
The financial industry also believes political variables will play into the outcome of the plenary. While the Yoon Suk-yeol administration favored a hard-line stance on sanctions, the new government is promoting a policy of expanding productive and inclusive finance. A financial industry official said, "Since banks' social role has grown after the change of administration, a penalty surcharge in the 1 trillion won range could be a burden," adding, "There may be room for the Fair Trade Commission to adjust the intensity of sanctions."
Depending on the outcome of the plenary, the financial sector could see the first-ever precedent on "information-exchange collusion." Conversely, if collusion is denied, the Fair Trade Commission's large-scale cartel probe that has continued for over two years could be put on hold.