HONG KONG (Yonhap News) ― Global investment bank JPMorgan on Monday played down the possibility of South Korean financial firms’ rigging of interest rates on certificates of deposit, saying they may have had limited benefits from it.

Korea’s Fair Trade Commission launched last week a probe into Kookmin Bank, the country’s largest lender, and eight other banks as well as 10 major brokerages over alleged CD rate rigging.

JPMorgan said in a report that banks and brokers would have a limited benefit from any fixed CD rate movement as Korean banks have relied less on CDs as funding instruments.

“We believe there is a limited possibility for banks and brokers to have manipulated the CD rate as it appears hard for them to get a sizable economic benefit from possible collusion over setting the CD rate,” said Scott Seo, a JPMorgan analyst.

A CD is a financial instrument sold by banks and circulated in secondary markets by securities firms. The 91-day CD rate is a key benchmark rate for local commercial bank’s lending and borrowing operations.

Most bank mortgage loans used to be tied to CD rates, but sales of CDs have fallen since 2010 due to the government’s tougher regulations on the loan-to-deposit ratios.

As of the first quarter of 2012, around 29 percent of loans are priced with the CD rate across the industry, JPMorgan said.

The antitrust watchdog has started to check into the current rate-setting mechanism at financial institutions and see whether it was possible for financial institutions to manipulate rates in order to profit at the expense of borrowers.

The Korean government, meanwhile, said that it will take “appropriate measures” based on the outcome of the probe underway.

The probe came as similar investigations are under way in the United States and Britain into several banks, including Barclays, for their alleged involvement in rigging the London Interbank Offered Rate, or Libor, a benchmark interest rate in the global financial market.

Meanwhile, Kim Seok-dong, the chairman of the Financial Services Commission, said that he does not believe banks and brokers have colluded in setting the CD rate.