The Korea Fair Trade Commission said on the 21st it imposed a 272 billion won penalty surcharge on KB Kookmin Bank, Shinhan Bank, Hana Bank, and Woori Bank over allegations of collusion. A Korea Fair Trade Commission (FTC) probe found the banks coordinated to set similar levels for the loan-to-value (LTV) ratios. If the LTV, a benchmark that determines how much can be borrowed, is lowered, corporations or individuals may have to provide additional collateral or turn to unsecured loans, which generally carry higher interest rates.
According to the Korea Fair Trade Commission (FTC) that day, the four major commercial banks frequently exchanged LTV information on real estate nationwide from Mar. 2022 to Mar. 2024. Banks set LTVs by dividing real estate by region and type. For example, retail properties in Seoul are set at 60% and factories at 55%. LTVs are trade secrets directly tied to bank management. If an LTV is excessively high compared with rival banks, risky loans may occur, making it difficult to recover funds. Conversely, if an LTV is excessively low, loan customers may be lost to competing banks.
However, it was found that working-level employees of the four major commercial banks, including KB Kookmin Bank, Shinhan Bank, Hana Bank, and Woori Bank, met in person and exchanged documents containing LTV information. The employees were said to have entered the LTV information from the documents into Excel files and then destroyed the documents. On this, the Korea Fair Trade Commission (FTC) said it viewed the conduct as "clearly recognizing the possibility of a legal violation and actively removing traces of the information exchange."
Based on this information, the Korea Fair Trade Commission (FTC) found that when the LTV for certain regions or property types at the four major commercial banks was higher than other banks, they lowered it, and when it was lower than other banks, they raised it. The LTV of the four major commercial banks suspected of participating in the collusion, at 62.05%, was 7.5 percentage points (p) lower than the LTV of three banks that did not.
For the four major commercial banks, the Korea Fair Trade Commission (FTC) applied a violation of Article 40, Paragraph 1, Item 9 of the Monopoly Regulation and Fair Trade Act, which punishes "collusion by the method of exchanging information on transaction terms." This case is the first application of the provision since it took effect at the end of Dec. 2021.
The penalty surcharge amounts were set at 86.9 billion won for Hana Bank, 69.7 billion won for KB Kookmin Bank, 63.8 billion won for Shinhan Bank, and 51.5 billion won for Woori Bank.