The financial regulator said on Feb. 28 it will ban banks from having exposures surpassing 25 percent of core capital, in line with stricter global banking regulations.
Global financial regulators agreed on the new banking regulations, known as Basel III, in 2017 and South Korea has helped local banks smoothly adapt the new rules, which are expected to take effect in 2022.
In a statement, the Financial Services Commission said it will ask banks to adopt the new capital rule on a trial basis from March.
The new rules, including revisions to calculation systems for capital requirements and credit risks, were set in the aftermath of the 2008-09 global financial crisis.
If Korea’s 17 main banks maintain their asset portfolios, the Basel III rules will cause their capital adequacy ratios, under the Bank for International Settlements’ standard, to rise slightly.
Financial authorities have said that the new rules are unlikely to have a negative impact on local banks, such as a decline in money supply.
By Ram Garikipati and newswires (firstname.lastname@example.org)