S. Korea fines four major banks 272bn won for alleged LTV collusion

(Yonhap)

South Korea’s antitrust watchdog on Wednesday imposed a combined 272 billion won ($185 million) in fines on four major commercial banks for allegedly colluding over loan-to-value (LTV) ratios in the mortgage market.

The banks have signaled plans to challenge the decision in court, setting the stage for extended litigation.

The Korea Fair Trade Commission said it concluded that the banks exchanged and used LTV information in ways that restricted competition in property-backed lending, issuing corrective orders alongside the penalties.

Under the decision, KB Kookmin Bank was fined 69.7 billion won, Shinhan Bank 63.8 billion won, Woori Bank 51.5 billion won and Hana Bank 86.9 billion won.

According to the commission, the four banks exchanged LTV data on at least 736 occasions and as many as 7,500 times between March 2022 and March 2024. Regulators said the banks adjusted their LTV levels to stabilize profits—lowering ratios when they exceeded peers to reduce loan recovery risk, and raising them when they lagged to maintain competitiveness.

As a result, the average LTV at the four banks was found to be lower than that of non-colluding lenders. In 2023, the average LTVs stood at 62 percent for the four banks versus 69.5 percent for others, a gap of 7.5 percentage points. The commission said this limited the ability of small and medium-sized businesses and self-employed borrowers to secure sufficient financing.

While investigators had considered fines potentially reaching the trillion-won range for each bank, the final penalties were scaled back during deliberations by the commission’s full panel, reportedly due to a reassessment of relevant sales figures.