South Korea to impose 1% countercyclical capital buffer requirement on banks

SOUTH Korea will impose a 1 per cent countercyclical capital buffer requirement on banks and their holding companies from May next year to make them better prepared for losses, the financial regulator said on Wednesday (May 24).

The Financial Services Commission (FSC) said in a statement there was a need to improve banks’ ability to absorb losses through preemptive capital accumulation, due to higher external and internal macroeconomic uncertainties and financial risks.

The countercyclical capital buffer (CCyB) ratio, first introduced in 2016, has remained at zero per cent since.

The FSC said all South Korean banks already hold enough capital for the adjustment and have enough ability to raise additional capital, adding the measure is aimed at improving the credibility of the banks’ soundness. REUTERS