South Korean regulators have launched a probe into commercial banks suspected of overcharging loan rates to capitalize on higher market interest rates from U.S. monetary tightening.
First to come under scrutiny for lending irregularities are BNK Kyongnam Bank, KEB Hana Bank, and Citibank Korea. They are accused of omitting the borrower’s income or collateral when calculating interest rates on bank loans, charging higher rates as a result.
BNK Kyongnam Bank was found to have engaged in 12,000 such practices in nearly 100 out of its total 165 branches. It either left out or lowered the income of borrowers to increase their debt-to-income ratio, which bumped up the rates by 0.25 to 0.5 percentage point. The bank admitted to excess gain of 2.5 billion won ($2.2 million) and offered to reimburse borrowers next month.
Authorities at the Financial Supervisory Service (FSS) will investigate all BNK Kyongnam Bank branches to identify any wrongdoings. The bank denies any intentionality.
Some outlets of KEB Hana Bank are accused of slapping maximum rates in extending new loans without sticking to the bank lending guideline.
Citibank Korea is suspected of profiteering by leaving out collateral from borrowers. It charged rates for unsecured loans although borrowers had assets to back.
Authorities will expand investigation beyond Seoul on suspicion that lenders have been overcharging borrowers to capitalize on increased market rates.
By Lee Seung-yoon and Kim Hyo-jin
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]