South Korea’s four major commercial banks are taking legal action to challenge the Fair Trade Commission’s sanctions over alleged collusion involving loan-to-value ratios, or LTVs.
The financial industry said Thursday that KB Kookmin, Shinhan, Hana and Woori banks planned to file an administrative lawsuit seeking to overturn the FTC’s penalty decision.
The FTC previously concluded the banks restricted competition in the real estate secured-loan market by exchanging LTV-related information and imposed total fines of 272 billion won. The commission said the banks kept LTVs below certain levels to limit loan supply and, as a result, increase interest income.
The FTC also said the conduct reduced access to loans for borrowers such as small and midsize enterprises and small business owners.
The banking industry has countered that the exchanges amounted to information sharing and do not constitute collusion. It argues LTV is not a competitive factor like price or interest rates, but an internal risk-management standard operated within financial regulators’ rules.
Banks also say the FTC’s view is hard to sustain because higher LTVs typically allow larger loans and greater earnings, making it difficult to argue they intentionally lowered ratios to boost profits.
* This article has been translated by AI.
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