FSS pointed out the bank rate calculation system… Will it be a touchstone for ‘reduction of the loan-to-deposit interest rate gap’?

[이데일리 서대웅 기자] The results of checking the loan-to-deposit interest rate calculation conducted by the Financial Supervisory Service for banks are expected to have a significant impact on the new government’s financial promises. President-elect Yoon Seok-yeol made a major financial promise to reduce the difference in interest rates between deposits and loans. While the FSS has tentatively concluded that some banks’ loan rate calculation systems were ‘irrational’, if the results of this inspection are finalized, it is highly likely that the promises of President-elect Yoon will be strengthened. However, there are many concerns within the authorities about meddling in market prices.

President-elect Yoon Seok-yeol visits the mayor of Namdaemun, Seoul on his first official outside schedule since his election on the 14th and holds a meeting with the presidents of the Merchants Association (Photo = Yonhap News)

The part that the Financial Supervisory Service is having a problem with in the calculation of the loan-to-deposit interest rate of some banks is analyzed as the additional interest rate for loans. While the FSS looked into deposit interest rates for about a month since mid-November last year, they spent more time checking loan interest rates from the end of last year. Many pointed out that the main culprit behind the widening of the loan-to-deposit interest rate gap is that banks have sharply raised the additional interest rate for loans.

Banks set the final loan interest rate by adding various additional interest rates, such as target profit rates, to the internal base rate set by themselves, reflecting market interest rates and procurement rates. In principle, the additional interest rate is calculated according to the ‘Model Standard for Enhancing the Rationality of the Loan Interest Rate System’ prepared by the bank in 2012. In the end, it is analyzed that the FSS judged that some banks applied standards that deviated from these guidelines.

Banks disclose the base interest rate and additional interest rate for the loan rate through the Federation of Banks every month, but do not disclose the details of the additional interest rate because it is a business cost. If the Financial Supervisory Service finally concludes that some banks have operated irrationally in calculating loan interest rates, voices calling for greater transparency in the disclosure of loan-to-deposit interest rates may grow. In order to reduce the loan-to-deposit interest rate gap, President-elect Yoon made the main pledges to introduce a periodic disclosure system for the loan-to-deposit interest rate difference, to review the appropriateness of the additional interest rate if necessary, and to check the collusion factors.

Yoon-elect Yoon, who managed the pledge at the predecessor headquarters, said, “I am well aware that the pledge to disclose the difference between deposit and loan interest rates can be seen as government finance. Because it is happening,” he said.

However, there are also concerns about the government’s intervention in market price determination. Banks are still disclosing the difference between the loan-to-deposit interest rate and the difference, but in addition to this, the only method is to disclose detailed items of additional interest rates such as risk premium, liquidity premium, and target profit rate, that is, various business costs. An official from the banking sector said, “The disclosure itself is a problem, but to disclose it is no more than pressure to lower the loan interest rate.”

In a recent report, the Korea Institute of Finance said, “Deposits are not sensitive to interest rates, but loans are highly sensitive because there are many floating rate loans. It is desirable that price variables such as bank interest rates and the resulting difference in loan-to-deposit interest rates be determined by market principles,” he said.


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