Fair Trade Commission Orders Reexamination of Loan Collusion Among Four Major Banks... "Additional Verification of Facts"

The First Case of Information Exchange Collusion

Yonhap News

The Fair Trade Commission (FTC) has ordered a re-examination after reviewing unfair practices related to the sharing of collateral loan information among the four major commercial banks: KB Kookmin Bank, Shinhan Bank, Hana Bank, and Woori Bank.

On the 21st, the FTC announced that on the 20th, after deliberating on the unfair joint actions of the four major banks, it decided to order a re-examination to further verify facts related to the claims made by the examiners and the respondents.

The FTC stated, "After confirming additional facts regarding this case, we plan to resubmit the agenda to the commission as quickly as possible."

As a result of this decision, the announcement of sanctions against the four major banks, which was expected as early as next week, is likely to be postponed until next year.

Previously, the FTC held plenary meetings twice on the 13th and 20th to discuss this case as an agenda item.

These banks are suspected of colluding by sharing necessary information for loans, such as the method of calculating the Loan-to-Value ratio (LTV) for each collateral item, to prevent setting excessively favorable loan conditions for customers.

LTV refers to the ratio indicating the maximum loan limit when a bank lends money using real estate such as apartments, commercial buildings, or factories as collateral.

The FTC believes that by sharing this information, the banks coordinated loan transaction conditions, thereby restricting competition in the collateral loan market.

Borrowers compare how much they can borrow based on the LTV and choose banks offering higher amounts, but due to collusion, borrowers were disadvantaged by being applied lower LTVs.

On the other hand, the banks argue that it was merely an exchange of information, not collusion, and that there was no unfair profit gained by the banks.

Meanwhile, if the FTC finalizes sanctions against the four major banks after the re-examination, it will be the first case of sanction under the newly established 'information exchange collusion' provision introduced by the 2020 amendment to the Fair Trade Act.