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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] South Korea’s four major commercial banks have filed an administrative lawsuit challenging the antitrust regulator’s ruling that their sharing of loan-to-value (LTV) information constituted collusion, bringing the case to court for final judgment.
According to the financial industry on March 21, KB Kookmin Bank, Shinhan Bank, Hana Bank, and Woori Bank filed a lawsuit with the Seoul High Court seeking to overturn the Fair Trade Commission’s (FTC) penalty decision. The filing came just ahead of the statutory deadline to contest the ruling.
In January, the FTC imposed a combined fine of 272 billion won (approximately $200 million) on the banks, concluding that their exchange of LTV information restricted competition in the collateralized lending market. The regulator argued that the practice led banks to maintain lower LTV ratios than competitors, thereby limiting borrowing capacity for small and medium-sized enterprises and small business owners.
While the penalty amount was smaller than earlier market expectations of around 1 trillion won, the banks have strongly opposed the FTC’s interpretation that information sharing alone constitutes collusion.
The banks maintain that the exchanges were part of routine risk management and did not generate any unfair gains. They argue that in a highly competitive corporate lending market, raising LTV ratios to extend more loans is key to attracting clients and increasing profitability, and that lowering LTV offers no strategic benefit.
With the lawsuit filed, the determination of whether LTV information sharing constitutes collusion will now be decided by the courts. The case is drawing significant attention across the financial and broader business sectors, as it marks the first instance in which information sharing has been deemed collusion under the revised Fair Trade Act introduced in 2021, potentially setting a precedent for future cases.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
