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FSS vows to focus on strengthening banking system stability

Economy 10:55 March 17, 2023

SEOUL, March 17 (Yonhap) -- South Korea's financial regulator said Friday it will focus its bank supervision this year on strengthening stability in the banking system amid worries that it could be affected by the failures of major U.S. financial firms.

"We will strengthen inspections of potential risk factors to ensure that unrest arising from overseas, such as the recent bankruptcy of Silicon Valley Bank (SVB) in the U.S., does not translate into a systemic risk in the domestic financial market," Kim Young-ju, deputy governor of the Financial Supervisory Service (FSS), told a meeting with bank officials while explaining this year's work plan for bank supervision.

"We plan to induce banks to expand their loss-absorbing capacity by introducing special loan loss reserves and improving the standards for reserving countercyclical buffer capital so that banks can perform their money intermediation role smoothly even when economic conditions deteriorate," he added.

South Korea's financial authorities are keeping a watchful eye on possible spillovers from the closures of SVB and Signature Bank, and a growing crisis over Credit Suisse, a major global investment bank.

Earlier this week, they assured that local banks have different asset-liability structures from those of SVB, saying that they are capable of tiding over "temporary shocks."

kokobj@yna.co.kr
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