The financial authorities decided to postpone the introduction of stress capital buffers for banks to the second half of next year, considering the recent surge in the won-dollar exchange rate and the increased market volatility. They will also ease the criteria for applying risk weights by excluding the market risk of structural foreign exchange assets from the calculation of risk-weighted assets.
On the 19th, the Financial Services Commission and the Financial Supervisory Service announced proactive measures to enhance financial stability and support the real economy. This measure was prepared based on requests from financial companies made during financial situation review meetings held after the state of emergency, within the limits permitted by global standards such as Basel III. The decision was finalized at a macroeconomic financial meeting.
The financial authorities prepared this measure to strengthen the resilience, liquidity, and financial stability of financial firms. They plan to establish or amend related standards by the end of the first quarter of next year. Additional measures will also be considered based on future market conditions.
Initially, the implementation of stress capital buffer regulations for the banking sector, which was scheduled for the end of this year, will be postponed to the second half of next year. The stress capital buffer regulation is a system requiring 17 domestic banks and 8 bank holding companies to accumulate additional capital to maintain normal functionality in crisis situations. Banks must accumulate up to an additional 2.5 percentage points of capital based on the decline in common equity tier 1 capital ratio due to crisis situation analysis, added to the existing minimum capital regulation ratio.
The financial authorities plan to exclude the market risk associated with non-transactional structural foreign exchange assets, such as investments in overseas corporations, from the calculation of risk-weighted assets. Additionally, they decided to reduce the reflection level of the insurance companies' solvency ratio (K-ICS) risk amount for the unused amount of approximately 1.5 trillion won in securities market stability fund remaining purchase commitments by half.
To strengthen support for the real economy, the burden related to loans and investments for domestic corporations will also be eased. Currently, a uniform risk weight of 400% is applied to venture funds investing in venture companies, but moving forward, the risk weights applicable to the actual invested assets such as bonds, stocks, and real estate will be used. Bonds will have a risk weight of 20% to 150%, stocks 100% to 400%, and real estate 20% to 150%.
Plans are in place to allow domestic corporations to utilize the credit ratings they receive from overseas credit rating agencies in the calculation of risk weights. Currently, domestic corporations without credit ratings from domestic agencies are assigned a non-rated status, leading to high risk weights applicable to loans and bonds.
A financial authorities official noted, 'Additional measures will be considered if necessary based on future market conditions.'