South Korea Slaps Major Banks With $184 Million in Fines Over Mortgage Coordination

The Fair Trade Commission said Shinhan Bank, Woori Bank, Hana Bank and KB Kookmin Bank unlawfully shared internal materials and sensitive business data tied to loan-to-value (LTV) ratios, a major standard that determines how much money homebuyers can borrow relative to a property’s value. Per a statement from the regulator, the information exchanges led the banks to align their lending limits in ways that weakened competition and limited consumer choice.

The commission said that by moving in parallel on LTV-related decisions, the banks reduced competitive pressure in the mortgage market. Although LTV ratios are regulated by the government as part of its efforts to manage household debt, banks still have room to decide how those caps are applied in practice. According to a statement from the commission, that discretion was undermined when the institutions coordinated their approaches.

Regulators said the information sharing occurred repeatedly between March 2022 and March 2024, involving anywhere from hundreds to thousands of exchanges of detailed LTV data. “Over an extended period, the four major banks repeatedly shared sensitive information whenever necessary,” said Lee Sun-mi, a senior official at the commission.

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The watchdog estimated that the coordinated conduct generated about 6.8 trillion won in interest income, helping the banks stabilize profits by reducing uncertainty about how their rivals would act. Together, the four lenders account for roughly 60 percent of South Korea’s mortgage loan market, giving their collective behavior significant influence over borrowing conditions nationwide.

“Consumers were left with little meaningful choice when selecting a lender,” said Moon Jae-ho, another senior commission official. He added that the precise financial harm suffered by individual borrowers was difficult to calculate.

The commission said the impact was particularly severe for small and midsized enterprises and self-employed individuals, who often have weaker credit profiles and rely more heavily on secured loans. For these borrowers, LTV decisions can determine whether financing is available at all, according to a statement from the regulator.

The case is the first brought under revisions to South Korea’s fair trade law that took effect in late 2021, which explicitly ban anticompetitive conduct through the exchange of sensitive business information even when there is no formal price-fixing agreement.

Authorities said the ruling reflects a tougher stance on coordination in financial markets as they seek to strengthen competition while managing rising household debt and ensuring access to credit across the economy.

Source: Korea Biz Wire