FSC and FSS announced their plans for the early adoption of the credit risk framework in Basel III. The announced adoption timeline of late June this year is more than one and a half year before January 01, 2022, which is the recommended adoption timeline by BCBS. The early adoption of the revised credit risk framework will begin gradually with domestic banks and bank holding companies. Additionally, changes to the calculation of operational risk capital will be implemented as scheduled in January 2022.
With the early adoption of Basel III rules, the government expects that banks with high proportions of business lending will see their BIS capital adequacy ratios increase, thus enabling banks to boost capital reserves to provide more funding to businesses. The government will finish revising the relevant rules and regulations in April, while providing assistance to financial companies to ensure that their system setup and verification are done smoothly. The government will continue to work on ways to ensure that the prudential regulations on financial institutions do not constrain their ability to respond flexibly in times of crisis.
Related Link: Press Release (PDF)
Keywords: Asia Pacific, Korea, Banking, Credit Risk, Basel III, Operational Risk, Standardized Approach, IRB Approach, BCBS, FSS, FSC
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