Ten banks and bank holding companies, including KB, Shinhan, Hana, Woori, and NongHyup Financial Group, have been selected as domestic systemically important banks (D-SIB) and domestic systemically important financial institutions (D-SIFI) for the next year.
The Financial Services Commission made this decision at its 14th regular meeting held on the 23rd. The banks and bank holding companies selected as D-SIB and D-SIFI are five holding companies: KB, Shinhan, Hana, Woori, and NongHyup Financial Group, and five banks: KB Kookmin, Shinhan, Woori, Hana, and NongHyup Bank.
The D-SIB system aims to minimize the impact of large financial company failures on the financial system and the economy by strengthening oversight of these companies, as recommended by the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS). Korea introduced the system in 2016 and has been selecting D-SIBs annually. Additionally, the selected banks and bank holding companies are required to maintain additional capital.
Accordingly, the ten banks and bank holding companies will be required to maintain an additional capital reserve of 1% next year. However, as the selection results are the same as this year, it is expected that there will be no significant burden from capital reserve requirements resulting from this selection.
The Financial Services Commission will also notify the selected banks and bank holding companies for D-SIFI for the next year of the selection results and request them to submit their self-normalization plans. D-SIFI must submit their self-normalization plans to the Financial Supervisory Service within three months of receiving the notification.
Meanwhile, the Financial Services Commission approved the self-normalization plans established by the ten banks and bank holding companies selected as D-SIFI this year to prepare for crisis situations. The commission also approved the recovery plans submitted by the Korea Deposit Insurance Corporation (KDIC).