Improvement of Additional Risk Assessment Criteria... Financial Services Commission Approves Revised Supervision Regulations for 'Geumyung Complex Financial Conglomerates'

Improvement of Risk-Weighted Capital Calculation Criteria by Additional Risk Assessment Grade

The Financial Services Commission announced that at the 11th regular meeting of the Financial Services Commission held on the 12th, it resolved the partial amendment of the "Regulations on the Supervision of Financial Conglomerates."

The purpose of this regulatory amendment is to improve the additional risk assessment criteria and the calculation standards for risk-weighted capital by grade for financial conglomerates, thereby enhancing the discriminative power of evaluation items and promoting consistency in the imposition of risk-weighted capital.

Currently, among the additional risk assessment items for financial conglomerates, the evaluation of internal control and risk management is structured to only verify whether matters stipulated by law have been internalized in internal regulations, resulting in low discriminative power of the evaluation. Through this amendment to the supervisory regulations, the scoring range for internal control and risk management evaluation items will be subdivided, which is expected to increase the discriminative power of the evaluation. The current scoring range of Satisfied (+1) and Not Satisfied (0) will be subdivided into Satisfied (+1), Partially Satisfied (+0.5), and Not Satisfied (0).

Additionally, the amended supervisory regulations raised the weighting of internal control and risk management evaluation items within the additional risk assessment from 20% to 30% to prevent the recurring issues of internal control failures in financial institutions and to encourage strengthening internal control management at the group level. The difference in risk-weighted capital imposed between grades based on the additional risk assessment results was also standardized to a 1.5 percentage point (P) difference between grades in the 3+ to 3- range.

The amended supervisory regulations resolved on this day will take effect from the date of promulgation.

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