Four savings banks, including Sangsangin, Sangsangin Plus, Raon, and Baro Savings Bank, have been found to fall short of the capital adequacy ratio recommended by the Financial Supervisory Service (FSS) based on the Bank for International Settlements (BIS) standards.
According to the financial sector on the 1st, the BIS ratios of these four savings banks, based on the first half financial statements, were below the recommended levels.
The FSS requires savings banks with assets of 1 trillion KRW or more to maintain a BIS ratio of at least 8%, and those with assets under 1 trillion KRW to maintain at least 7%. If the ratio falls below these thresholds, timely corrective measures for management improvement can be imposed.
Additionally, a 3 percentage point buffer is added to set the recommended standards at 11% and 10%, respectively. If the BIS ratio falls below these recommended levels, the banks are required to submit capital procurement plans that include emergency capital expansion measures, plans for paid-in capital increases, and financial structure management strategies.
As of the end of June, the BIS ratios of Sangsangin, Sangsangin Plus, and Baro Savings Bank, each with assets exceeding 1 trillion KRW, were 10.45%, 9.72%, and 10.67%, respectively, all below the recommended 11%. Notably, if the BIS ratio of a savings bank with assets over 1 trillion KRW falls below 10%, it may be subject to a standalone investigation by the Deposit Insurance Corporation, a condition met by Sangsangin Plus Savings Bank.
Raon Savings Bank, with assets under 1 trillion KRW, also had a BIS ratio of 9.01% as of the end of June, falling short of the recommended 10%.
Under current law, the Deposit Insurance Corporation can conduct standalone investigations of savings banks in consultation with the FSS, considering trends and the extent of BIS ratio declines, to determine insolvency criteria and depositor protection measures.
Earlier, Sangsangin Plus Savings Bank raised capital through a paid-in capital increase worth 13 billion KRW (based on issuance price) at the end of March.
The FSS continuously monitors capital adequacy indicators and requires capital procurement plans if the BIS ratio falls below the recommended standards.
An FSS official stated, "Although no banks have fallen below the statutory BIS ratio, savings banks below the recommended standards are required to submit capital procurement plans, including capital increases through paid-in capital issuance."
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