Citibank Korea, JPMorgan colluded for currency swap bid: Supreme Court
A view of the exterior of JPMorgan headquarters in New York / Reuters-Yonhap
By Lee Min-hyung
The Supreme Court has ruled in favor of a decision by the Fair Trade Commission (FTC) to slap penalties on four foreign financial firms, including Citibank Korea and JPMorgan, for colluding on currency exchange swap bids here, according to the antitrust agency, Wednesday.
In 2020, the FTC imposed a combined 1.32 billion won ($1 million) fine on Citibank Korea, HSBC and Credit Agricole for their involvement in rigging the bid process for swap transactions with Korean state-run companies, such as Korea Hydro & Nuclear Power (KHNP) and the Korea Highway Corp. The authority also ordered them to correct their business malpractices. JPMorgan received a correction order without any fines.
Earlier, Citibank Korea was slapped with a 900 million won fine, followed by HSBC with 387 million won and Credit Agricole with 34 million won. Citibank Korea and JPMorgan, however, protested the FTC decision and filed an administrative suit with the Seoul High Court. In 2021, the court reversed the FTC's decision.
The fair trade authority then brought the case to the Supreme Court and it ended up siding with the watchdog in a ruling made Aug. 31. The watchdog also urged the four companies to stop any price-sharing violations.
The FTC expected the latest ruling will help build a fairer competition environment among lenders.
“The ruling will promote price competition when lenders bid for currency swap transactions in the future,” an FTC official said. “Lenders are also expected to tighten their internal control systems, particularly on their sales personnel's possible illegal activities.”
The watchdog has pledged to impose tough sanctions against any financial firms engaging in such unfair acts and step up its monitoring on collusion for price-fixing.
Citibank Korea headquarters in Seoul / Yonhap
Citibank Korea and JPMorgan did not provide any immediate responses to the Supreme Court's decision.
“Citibank declines to comment on-record,” a spokesperson at the lender said in an email.
A spokesperson at JPMorgan was unavailable for comment.
It remains unclear whether the two foreign financial firms will launch additional lawsuits against the watchdog.
A currency exchange swap is a type of transaction used to trade a certain amount of different currencies at a designated future date. This is utilized as a means of hedging against potential risks from the depreciation of the Korean won.
According to the FTC, HSBC helped Citibank Korea win a bid for a currency swap transaction with KHNP, dropping its tender for the deal. Citibank Korea and JPMorgan also engaged in an act of price manipulation, so as for HSBC to win its currency swap bid with the Korea Highway Corp.