South Korea’s four biggest banks face investigation over interest rates

South Korea’s competition watchdog is investigating the country’s four largest commercial banks over possible interest rates collusion.

The country's fair trade commission sent inspectors to Kookmin Bank, Woori Bank, Shinhan and Hana Bank this week to look into data related to setting interest rates, officials at each of the banks said yesterday.

The commission declined to comment on the investigation, but a person familiar with the situation confirmed the inquiry.

According to state-run news agency Yonhap, the antitrust body dispatched six inspectors to each of the four banks to meet officials in charge of setting interest rates and examine some documents, emails and online messages to see if they communicated with their counterparts at other lenders about rates.

It comes as banks are embroiled in a series of market-rigging scandals. These inquiries have been spawned by the scandal over collusion and rigging of the London interbank offered rate. The multiyear global Libor investigation has so far prompted regulators and the European Commission to charge $5.8 billion (€4.4 billion) in fines to 10 financial institutions.

Interest rates are a sensitive issue in South Korea, where household debt stands at more than 150 per cent of disposable income.

Local media speculated the inquiry might have been sparked by consumer complaints that local banks cut loan rates much less than their deposit rates, after the central bank lowered its policy rate by 25 basis points to 2.25 per cent this month. – (Copyright The Financial Times Limited 2014)