South Korea’s financial regulator has launched an investigation into possible interest rate manipulation by four of the country’s banks, according to a BBC report.
The banks — Kookmin, Shinhan, Woori and Hana — are being investigated for possible collusion over setting of certificates of deposit (CD), which are used to determine interest rates on loans.
This is the latest scandal to hit the global banking industry and follows the LIBOR-rigging of Barclays, as well as yesterday’s news of HSBC being used to launder dirty funds, including Mexican drug money.
“If the investigation finds collusion, there will be significant fines. Even if there was no collusion, it’s highly likely that the government’s motive behind the investigation is to lower household lending rates by inducing a fall in CD rates,” said Taurus Investment analyst Andy Lee said in a research report.
Shares in the four banks under investigation fell on the news of the investigation, with Hana leading the drop with a fall of 2.7%. The banks have confirmed that they are being investigated and according to news agency Reuters, no foreign-based financial companies are understood to involved in the alleged rate-rigging.