Korean banks cleared of rate collusion charges

No charges were filed against South Korea’s six commercial banks after 1,449 days of investigations into their alleged collusion in setting the three-month certificate of deposit (CD) rates, a benchmark for consumer bank loans.

The Fair Trade Commission started the probe in 2012 July and said Wednesday the case review terminated, meaning its decision will be delayed indefinitely due to the lack of evidence.

The six are Shinhan Bank, KB Kookmin Bank, Woori Bank, KEB Hana Bank, NH NongHyup Bank and Standard Chartered Bank Korea.

Text messages on a messenger program exchanged between officials at the six banks were secured as evidence, but even these messages did not involve decision makers and there was no price dialog related to possible collusion.

During the investigations, the FTC head was changed three times, but the former and current heads all expressed their confidence in penalizing the banks based on clear evidence of rate rigging during parliamentary inspections or press conferences. Noh Dae-rae, former chairman of the FTC, even said during a parliamentary inspection in 2014 “evidence about the CD rate fixing has been secured and the case will be handled as soon as possible.” But the results of the four-year investigations were reputed during a trial of just eight hours, raising questions about the antitrust agency’s investigation ability.

The FTC also came under fire after it opted for case review termination instead of no charge despite a lack of clear evidence, leaving room for it to restart the probe whenever evidence is secured.

The FTC started its probes on the six banks in 2012 after it suspected CD rate at a higher level than the market price between 2009 and 2012, which could have helped the banks gain more handsome profit.

Banks welcomed the FTC’s announcement, breathing a sigh of relief. A bank official said banks are now free from the allegation of having deceiving consumers that has put local banks under criticism for unlawfully making money over the past four years. “We are now also able to evade any follow-up penalty or class suits,” the official added.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]