SEOUL, March 16 (Reuters) – South Korea is considering requiring banks to hold more capital to better prepare the banking system for financial instability, the top financial regulator said on Thursday.
The Financial Services Commission (FSC) said in a statement it was considering raising the countercyclical capital buffer (CCyB) rate from the current zero percent as early as the second half of this year.
It said authorities may have raised the ratio from late 2019 following a sharp surge in lending, but were unable to do so due to shocks from the COVID-19 pandemic in 2020.
The CCyB is to be adjusted so that lenders should accumulate capital to create buffers that strengthen the resilience of the banking sector during periods of stress when losses occur.
The FSC also said it will also strengthen other regulatory guidance on banking supervision and will immediately direct individual banks to build more capital buffers as needed, based on the outcome of regular stress tests.
last update
Watch 2 more stories
The FSC announced that it would finalize plans for implementation from the second half of the year by the end of June.
Reporting by Choonsik Yoo; Edited by Kim Coghill
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.