FSC Korea Extends Certain Measures to Ease Impact of COVID-19 Crisis
FSC Korea decided to extend certain interim deregulatory measures on net stable funding ratio, liquidity coverage ratio for banks, and net capital ratio for securities firms. These measures were introduced in April 2020 to continue to support the financial sector amid COVID-19 pandemic. FSC Korea also decided to extend the duration of the repayment support for small and medium enterprises (SMEs) and small merchants until March 31, 2021, due to growing concerns about COVID-19 pandemic. The regulator highlighted that COVID-19 emergency support measures and follow-up plans for the Korean New Deal fund were the key topics of discussions at the financial risk assessment meeting held in September 2020.
FSC Korea announced extension of the following interim deregulatory measures:
- Liquidity Coverage Ratio (LCR) for Banks—In April 2020, FSC Korea introduced a measure to lower the foreign currency liquidity coverage ratio from 80% to 70% by the end of September 2020. Similarly, FSC also decided to bring down the total liquidity coverage ratio from 100% to 85% by the end of September 2020. FSC is now extending the timeline of these measures from the end of September 2020 to end of March 2021.
- Net Capital Ratio for Securities Firms—FSC Korea decided to extend the measure to lower risk-weights when calculating securities firms’ net capital ratio for newly issued business loans from the end of September 2020 to the end of December 2020.
- Net Stable Funding Ratio—The measure related to granting 10%p more leeway (from 10%p to 20%p) in net stable funding ratio rule of Korea Development Bank has been extended from the end of June 2021 to the end of June 2022.
At the financial risk assessment meeting, the FSC Vice Chairman Sohn Byungdoo discussed the government announcement about a new round of emergency support for small merchants and SMEs, with the intention to help these entities with the impact of the COVID-19 resurgence. With regard to the second-round emergency loan program for small merchants, the government will double the individual loan cap from KRW 10 million to KRW 20 million and allow first-round support recipients to be eligible for second-round emergency loans as well. Accordingly, the first-round support recipients within KRW 30 million may apply for second-round emergency loans starting from September 23, 2020. For SMEs, the government will make available KRW 2.5 trillion in additional lending support through preferential credit loans and expand issuance of primary collateralized bond obligation available for each business entity and sector.
Vice Chairman also highlighted that the government will work on follow-up measures for launch of the Korean New Deal fund. To this end, a working group, led by the Korea Development Bank and Korea Growth Investment Corporation, will be set up to come up with operational guidelines and specific plans. In September, the government will establish a guideline for Korean New Deal investment, which will specifically designate investment targets and areas in Digital and Green New Deal initiatives.
Related Links
- Press Release on Extension of Deregulatory Measures (PDF)
- Press Release on Extension of Repayment Support for SMEs (PDF)
- Press Release on Financial Risk Assessment Meeting (PDF)
Keywords: Asia Pacific, Korea, Banking, COVID-19, LCR, NSFR, Basel, Credit Risk, SME, Regulatory Capital, Liquidity Risk, Loan Repayment, FSC
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
CFTC Publishes Rules for Swap Dealers and Major Swap ParticipantsRelated Articles
EBA Publishes Final Regulatory Standards on STS Securitizations
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
IOSCO Welcomes Work on Sustainability-Related Corporate Reporting
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
BoE Allows One-Day Delay in Statistical Data Submissions by Banks
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
ACPR Amends Reporting Module Timelines Under EBA Framework 3.2
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
APRA to Modernize Prudential Architecture, Reduces Liquidity Facility
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.
