Asia bank capital series: Korea Basel III implementation explained

Author: Ashley Lee | Published: 16 Sep 2013
  • Unlike other Asian jurisdictions, Korea delayed its implementation of Basel III because of concerns that advanced economies had not yet implemented their Basel III frameworks;
  • Korea’s capital requirements are largely similar to that specified in the international Basel III framework;
  • However the Financial Services Commission is contemplating buffers for domestic systemically important institutions (D-SIBs);
  • Korean banks are well-capitalised so market participants do not expect them to issue contingent convertible bonds (CoCos) in the near future.

Although Korean banks are generally well-capitalised, it is feared that the implementation of Basel III later this year will rein in their growth.

Although Korea was scheduled to implement the Basel III guidelines at the start of 2013, it delayed implementation in a last-minute announcement. In May, Korea’s financial services regulator, the Financial Services Commission (FSC), announced it would implement Basel III on December 1 2013.

This gave Korea’s banks extra time to...