Financial Supervisory Service "Korea received the highest grade in the Basel Committee's LEV regulatory evaluation"

(Seoul = Yonhap News) Reporter Kang Ryu-na = The Financial Supervisory Service announced on the 14th that Korea obtained the highest grade of 'Compliant' in the Basel Committee on Banking Supervision (BCBS)'s Simple Capital Ratio (LEV) Regulatory Implementation Assessment (RCAP).

The results of this evaluation were finally approved at the regular meeting of the Basel Banking Supervision Committee on the 28th of last month and announced the day before.

According to the Financial Supervisory Service, the Basel Committee has been evaluating the implementation status of the simple basic capital ratio by country in six countries, including Korea, the United Kingdom, Japan, Australia, Canada, and Switzerland, since October last year.

The simple basic capital ratio regulation is a system that requires basic capital to be maintained at 3% or more compared to total risk exposure, regardless of credit rating.

The domestic banking sector has been calculating and announcing this every quarter since 2015, and has been applying a management guidance ratio of 3% since 2018.

The Basel Committee gave Korea's simplified basic capital ratio regulatory system the highest grade of 'Compliant' in all three detailed areas (definition, application and calculation, exposure measurement and disclosure requirements) as well as an overall grade.

The Financial Supervisory Service explained that one point was discovered during the evaluation process, but it was classified as a non-critical matter and did not affect the overall rating.

The Basel Committee compares the laws and regulations of each country and the Basel standards to check for differences, and then classifies any differences as 'points of interest' and minor differences as 'observations'.

Previously, Korea also received a ‘compliant’ rating in the regulatory implementation evaluation of the 2016 capital and liquidity coverage ratio and the 2024 net stable funding ratio. In the large exposure regulatory evaluation, it received a rating of ‘Largely Compliant’, which is one level below.

The Financial Supervisory Service said, "Through this evaluation, the consistency of the domestic regulatory system with international standards has been officially confirmed," and "Based on the response capabilities accumulated during the evaluation process, we will also prepare the regulatory implementation evaluation for risk-weighted assets (RWA) scheduled for next year without a hitch."