Basel III Capital Regulations to be Implemented from December 2013May 31, 2013

BACKGROUND

Korea has already finalized preparation of relevant rules for the implementation of Basel III. However, authorities postponed the initially scheduled date for implementation (Jan.1, 2013) considering the uncertainty of adoption status of other member countries and decided to adjust Basel III implementation schedule after closely monitoring the progress of other member countries.

CURRENT TREND

As of April, 23 among 27 Basel Committee on Banking Supervision member countries finalized the implementation schedule.

< Basel III implementation Schedule (as of April 30, 2013)>

Region

Implementation

Schedule

Member Countries

 

Asia

Not finalized(2)

Korea, Indonesia

Finalized(7)

Japan, Singapore, Hong Kong, China, India, Saudi Arabia, Australia

 

Europe

Not finalized(1)

Turkey

Finalized(11)

Switzerland, Russia, EU(UK, France, Germany, Italy, Belgium,

Netherlands, Luxemburg, Spain, Sweden)

Americas, Africa

Not finalized(1)

USA

Finalized(5)

Canada, Mexico, South Africa, Brazil, Argentina


IMPLEMENTATION OF BASEL III

The FSC, in close coordination with the MOSF, FSS, BOK, and other relevant authorities, came to a decision to implement Basel III on December 1, 2013. The decision was made as major Asian economies have already implemented Basel III capital regulations in 2013 and the banking industry requires time to prepare for the adoption.

EXPECTED EFFECTS

The Basel III regulation to take effect this year will be limited to bank capital requirements. Since the capital of most domestic banks consists of common equity, the impact of Basel III capital regulations will not be significant unlike banks in the US and Europe.


FUTURE PLAN

The authorities will gather additional opinions on the revisions to the ‘Regulation on Supervision of Banking Institutions’ and ‘Enforcement Rules for Banking Supervision’ from May 31 to June 19, 2013. Final decision will be made by the FSC in June.

<Basel I, II, III Comparison>


Region

Implementation

Schedule

Member Countries

 

Asia

Not finalized(2)

Korea, Indonesia

Finalized(7)

Japan, Singapore, Hong Kong, China, India, Saudi Arabia, Australia

 

Europe

Not finalized(1)

Turkey

Finalized(11)

Switzerland, Russia, EU(UK, France, Germany, Italy, Belgium,

Netherlands, Luxemburg, Spain, Sweden)

Americas, Africa

Not finalized(1)

USA

Finalized(5)

Canada, Mexico, South Africa, Brazil, Argentina


<Basel III Implementation Schedule>


 

’11

’12

’13

’14

’15

’16

’17

’18

’19

  Minimum Common Equity Capital Ratio (A)

 

 

3.5

4.0

4.5

4.5

4.5

4.5

4.5

  Capital Conservation Buffer (B)

 

 

 

 

 

0.625

1.25

1.875

2.50

- Minimum Common Equity Plus Capital Conservation Buffer(A+B)

 

 

3.5

4.0

4.5

 

5.125

5.75

 

6.375

7.0

   Minimum Tier 1 Capital

 

 

4.5

5.5

6.0

6.0

6.0

6.0

6.0

   Minimum Total Capital (C)

 

 

8.0

8.0

8.0

8.0

8.0

8.0

8.0

- Minimum Total Capital Plus Conservation Buffer (B+C)

 

 

8.0

8.0

8.0

8.625

9.25

9.875

10.5


Leverage Ratio (Tier 1 – 3%)

Supervisory monitoring

Parallel run Discloser starts 1 Jan, 2015

Revision

Introduce

minimum standard

 


LCR (≥100%)

Observation period

60

70

80

90

100

NSFR (≥100%)

 

Observation period

Introduce

minimum standard

 


*Please read the attached file for details.