South Korea: No evidence of CD-rate rigging in Bank case

South Korea’s antitrust watchdog said Wednesday that it has closed a probe into years-long allegations that six local commercial banks fixed their certificate of deposit rates, citing a lack of evidence.

Six major banks including Shinhan Bank, Kookmin Bank and Woori Bank had allegedly colluded to rig the CD rate to be at a higher level than the market price between 2009 and 2012, while the central bank started to take the expansionary monetary policy in 2012.

A CD is a financial instrument sold by banks and circulated in secondary markets by securities firms. Most bank mortgage loans are tied to CD rates.

The average bank deposit rate fell about 0.3 percentage point between November 2011 and July 2012, but the CD rate dropped 0.01 percentage point over the same period. A higher CD rate than the bank deposit rate brings the banks a larger interest margin.

With growing public complaints in 2012, the Fair Trade Commission (FTC) began looking into suspected collusion among the financial companies to fix interest rate on CDs.

Four years later, however, the watchdog, in effect, cleared the banks from the allegations, which led many local civic groups to file class action suits against the lenders.

Full Content: Korea Times

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