My Loan Borrowed from Citibank... When and How Will It Change? (Comprehensive)

Citibank Union Meets Financial Authorities, Delivers Position Statement
Document Claims "Citibank Loan Conversion Plan" and Expected Damages
Personal Credit Loans Due → 10-Year Principal and Interest Installment Repayment
For SOHO Loans Used as Operating Funds, '5-Year Installment Repayment Loan'
Claims Maturity Lump-Sum Repayment to Be Extended 3 Times Then Converted to Installments
Union Opposes, Saying "Financial Consumers' Interest Burden Will Increase"

[Asia Economy Reporter Song Seung-seop] There are prospects that the principal and interest repayment amounts of borrowers who borrowed money from Citibank Korea may increase in the future. This is because Citibank Korea is considering changing loans of customers whose maturity has arrived to a ‘long-term principal and interest repayment’ method or selling loan assets. The labor union opposes this plan, drawing attention to future consumer protection measures.

According to the industry and financial authorities on the 23rd, the Citibank Korea labor union met with executives and officials in charge of banks at the Financial Supervisory Service along with the Financial Labor Union on the 19th. At this meeting, the union estimated and conveyed the expected damage scale that could occur from the loan conversion method planned by Citibank Korea and 11 products in the credit, deposit, and card sectors.

The bank must prepare measures to prevent consumer damage when withdrawing from retail finance under the instructions of financial authorities. The key is to devise alternatives so that borrowers are not adversely affected when their loans mature.

According to the document, Citibank Korea is examining a method to convert personal credit loans with expired contracts into ‘10-year maturity principal and interest installment loans.’ Even if the loan was borrowed as a ‘lump-sum repayment at maturity’ loan, instead of refusing extension, the borrower repays over a long period in installments. For personal business owners and small and medium-sized enterprise loans (Soho loans), operating funds are planned to be converted into ‘5-year maturity installment loans,’ and lump-sum repayment loans can be extended up to three times (years) before being refinanced into installment loans.

The union expressed an opinion that this plan is inappropriate as it increases the monthly interest burden on consumers. The union estimated that a customer who borrowed 100 million KRW through a personal credit loan (average interest rate 4.34%) paid 360,000 KRW monthly under the lump-sum repayment at maturity method, but would have to repay 1,030,000 KRW monthly under the 10-year maturity principal and interest installment method. For Soho loans as well, refinancing into installment loans would incur costs such as stamp tax and is likely to increase interest rates due to the application of long-term rates.

The union also opposed the sale of loan assets. The reason is that if another bank buys the loan assets, there is a high possibility of reducing credit limits or raising interest rates. At the meeting, Jin Chang-geun, chairman of the Citibank Korea labor union, reportedly emphasized, “I understand that the sale of loan assets is being considered as one of the liquidation measures at the board of directors,” and “loan assets should not be sold to prevent consumer inconvenience and damage.”

Union Claims "Credit Limits Reduced or Interest Rates Raised if Loan Assets Sold"

Seoul Jongno-gu Korea Citibank Headquarters.

A union official warned, “Two-thirds of personal credit loans exceed the customer’s annual salary,” and “the bank that buys these loans will reduce the total loan limit.” Regarding Soho loans, which are Citibank Korea’s main product with a scale of about 5.7 trillion KRW, the official said, “The average interest rate of existing loans is around 2.5~2.8%,” and “if the asset sale is completed, the purchasing bank will inevitably raise interest rates to improve profitability considering the recent market’s new interest rates.”

Concerns were also raised that customers holding ‘Citi Points’ without expiration dates could suffer disadvantages due to card renewal suspension. Currently, Citibank Korea has about 1.05 million credit cards with Citi Points (26.4 billion points) and Premier Mileage Points (4 billion points). If card renewal is suspended and membership withdrawal occurs, Citi Points will disappear after a certain period. It is argued that customers will be unfairly forced to convert points into mileage with an expiration date against their will.

Regarding insurance, it was mentioned that “it is impossible to transfer to other financial institutions, and consultation with specialized staff holding sales qualifications is required.” Currently, customers can visit branches and handle related tasks collectively through the person in charge regardless of the number of contracts, but if the transaction branch closes, customers who want additional transactions or changes will face greater inconvenience. It was also stated, “In case of insurance claim events according to the terms, support such as claims can be received through specialized Citibank Korea staff, but after branch closure, long-distance travel becomes inevitable to receive services.”

It was pointed out that repayment plans must be prepared for revolving products mainly used by financially vulnerable groups. This is because if a lump-sum repayment is demanded from customers after credit card renewal suspension in the future, it could cause a heavy burden. Citibank Korea’s revolving payment accounts number about 914,000.

The union also suggested regarding overseas funds, “Unlike domestic funds, it is impossible to transfer sales companies,” and “non-face-to-face consultation is difficult, and continuous management by specialized staff with sales qualifications is necessary.”

Meanwhile, a Citibank Korea official explained, “There is nothing to confirm, and nothing is finalized until an official announcement is made.” The timing for finalized consumer protection measures has not yet been determined.

This content was produced with the assistance of AI translation services.