South Korea's anti-trust watchdog launched its probe into local banks on suspicions that lenders colluded on setting rates for the 91-day certificate of deposits ( CDs), Yonhap News Agency reported Wednesday.

According to the media, Fair Trade Commission (FTC) investigators confiscated records on CD issuance by 4 major commercial banks, including Kookmin Bank, Shinhan Bank, Woori Bank and Hana Bank, to examine whether lenders engaged in rigging the CD rate, a benchmark for lending rates.

The report came one day after the watchdog made an on-spot investigation into local brokerages. The CD rate is published by the Korea Financial Investment Association (KFIA) twice a day after excluding the highest and lowest rates from those offered by 10 local securities firms.

Suspicions remained that brokerages probably offered the rate higher with the intention of avoiding hatred from banks, which are their major customer, while lenders gave a tacit approval to it. The higher the CD rate, the more banks will benefit from because most household loans by banks are floating loans with its rate linked to the CD rate.

A series of investigation into financial firms came as the CD rate remained at a high level despite the drop in other market interest rates. The 91-day CD rate stayed at 3.54 percent over four months to June 30, while the three-year Korea Treasury Bond ( KTB) yield dropped from 3.56 percent to 3.29 percent over the cited period.