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Photo Credit: Fair Trade Commission of Korea |
[Alpha Biz= Paul Lee] South Korea’s Fair Trade Commission (KFTC) is expected to deliver its ruling in the second half of 2025 on allegations that the nation’s four major commercial banks colluded on Loan-to-Value (LTV) ratios for real estate-secured loans.
According to industry sources on August 4, KB Kookmin Bank, Shinhan Bank, Hana Bank, and Woori Bank have not requested any further extensions for submitting their written opinions, which were due by August 1. The KFTC had initially issued a statement of objections in January 2024, accusing the banks of sharing approximately 7,500 LTV-related data points in advance, suggesting cartel-like behavior.
The commission believes that the banks shared lending conditions and simultaneously lowered their LTV ratios, which reduced available loan amounts for consumers and forced some to turn to higher-interest unsecured loans. This, in turn, allegedly restricted consumer choice and resulted in unfair gains for the banks.
However, the banks argue that they had no incentive to lower LTV ratios, as customers generally prefer institutions offering higher loan limits. Lowering LTVs would, therefore, reduce banks’ potential interest income, they claim.
The KFTC is currently reviewing the submitted opinions and plans to bring the case before a full commission meeting for final deliberation.
While earlier projections suggested that fines could exceed KRW 1 trillion, observers note that the penalty level may be adjusted under the current Lee Jae-myung administration, which has placed greater emphasis on financial cooperation and inclusive finance. The original investigation had been prompted by former President Yoon Suk-yeol’s directive to address monopolistic practices in the banking sector.
Some friction may also emerge between the KFTC and the Financial Services Commission (FSC), as the latter has traditionally used LTV regulation as a key policy tool for household debt management. There are concerns that the KFTC’s actions could be interpreted as overstepping its authority in the financial domain.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
