Financial Services Commission to Receive 'Crisis Preparedness Self-Rescue Plans' from Banks and Financial Holding Companies

From July, Banks and Financial Holding Companies Selected as 'Systemically Important Financial Institutions'

[Asia Economy Reporter Kwangho Lee] From July, financial institutions designated as 'systemically important financial institutions' must submit a self-recovery plan to the Financial Supervisory Service to restore soundness in preparation for management crisis situations.

The Financial Services Commission announced that the amendment to the Enforcement Decree of the Act on the Structural Improvement of the Financial Industry, which includes this content, passed the Cabinet meeting on the 19th.

The FSC plans to select systemically important financial institutions annually among banks (including Nonghyup and Suhyup banks) and financial holding companies, considering the functions and scale of financial institutions, as well as their interconnectedness and influence with other financial institutions.

Once designated as a systemically important financial institution, the institution must prepare a 'self-normalization plan' to restore soundness independently in preparation for management crisis situations and submit it in writing to the Financial Supervisory Service within three months.

The Financial Supervisory Service will promptly forward the self-normalization plan to the Korea Deposit Insurance Corporation, which will prepare an evaluation report on the plan and submit both the self-normalization plan and the evaluation report to the FSC within three months.

The FSC will decide whether to approve the self-normalization plan and the resolution plan within two months after deliberation by the review committee.

If a systemically important financial institution is determined to be a failing financial institution, the FSC may suspend the termination and settlement of eligible financial transactions (specific derivative financial transactions) with counterparties. The suspension period is from the time the suspension decision is made until midnight of the next business day.

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