FSC Approves Self-Recovery and Resolution Plans for 10 Banks and Bank Holding Companies
Ten Systemically Important Financial Institutions Selected
Approval Granted for Resolution Plans Prepared by the Korea Deposit Insurance Corporation
On July 23, the Financial Services Commission announced that it had approved the self-recovery and resolution plans for ten "systemically important financial institutions" at its 14th regular meeting.
The system for designating domestic systemically important banks and bank holding companies (D-SIB) is a framework recommended by the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS) to strengthen supervision of large financial institutions, in order to minimize the impact that the failure of such institutions could have on the financial system and the broader economy. This system was introduced in Korea in 2016, and D-SIBs have been selected annually since then. Selected banks and bank holding companies are required to maintain additional capital buffers.
Since 2021, banks and bank holding companies designated as D-SIBs have also been classified as systemically important financial institutions (D-SIFI) under the Act on the Structural Improvement of the Financial Industry (the Financial Industry Structural Improvement Act), and are subject to the self-recovery and resolution plan requirements. The ten institutions selected are Shinhan Financial Group, KB Financial Group, Woori Financial Group, NongHyup Financial Group, Shinhan Bank, Kookmin Bank, Woori Bank, NongHyup Bank, and Hana Bank.
The Financial Services Commission determined that the self-recovery and resolution plans submitted this year generally comply with international standards, including recommendations from the Financial Stability Board, as well as the requirements of the Financial Industry Structural Improvement Act, and that no significant vulnerabilities were identified.
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The Financial Services Commission stated, "The self-recovery and resolution plans approved this year reflect a more sophisticated crisis response system compared to the previous year," adding, "We expect that these measures will enhance the preparedness of major bank holding companies, banks, and resolution authorities to respond more swiftly and proactively in crisis situations, thereby contributing to the stability and resilience of the financial system."
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