WHOLESALE BANKING | Cesar Tordesillas, Korea

Stiffer capital rules eyed for Korea's banks

Stricter capital rules under Basel III will be implemented among Korea's banking groups starting next year.

This is to comply with global moves to beef up capital buffer.

Under Basel III, banks should hold more common equities to boost their capacity to absorb losses. Banks will be required to hold at least 7 percent of common shares and 10.5 percent of total capital, according to South Korea's Financial Supervisory Service.

The FSS said Basel III and its predecessor Basel II will be introduced to local financial services companies that have a banking unit under their wings starting 2013. However, they will be required to follow those stricter capital rules from 2014 after a one-year preparation period, it added.

Currently, the country's 10 banking groups are under supervision with lax capital rules called "Basel I."

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