The top five financial groups and their affiliated banks, including Shinhan, KB, Hana, Woori, and NH, have been designated as systemically important financial institutions for 2027. These institutions are required to maintain higher capital reserves than regular banks and prepare their own recovery plans for crisis situations.
The Financial Services Commission announced on July 31 that it has selected the five major financial groups along with Shinhan Bank, KB Kookmin Bank, Hana Bank, Woori Bank, and NH Nonghyup Bank as 'systemically important banks and bank holding companies' for 2027. The list remains unchanged from last year.
Systemically important banks are defined as large institutions with significant interconnectedness to other financial entities, meaning that their failure could impact the entire financial market. Regulatory authorities evaluate domestic banks, foreign bank branches, and bank holding companies annually based on size, interconnectedness, and the difficulty of substituting them with other financial institutions.
In addition to the five major financial groups and banks, the Industrial Bank of Korea and the Export-Import Bank of Korea also exceeded the selection criteria. However, these two banks were excluded from the final list due to government ownership and legal provisions for loss compensation.
The ten selected institutions will be required to set aside an additional 1% in capital reserves next year. Consequently, the common equity tier 1 capital ratio must be maintained at a minimum of 9%, the total capital ratio at 12.5%, and the basic capital ratio at 10.5%.
However, the Financial Services Commission noted that since the selection results are the same as last year and the capital ratios of these financial institutions exceeded the minimum requirements as of the end of 2025, the new capital burden is not expected to be significant.
These financial institutions are also required to submit plans for self-recovery in the event of a crisis. They must submit their recovery plans, which include measures for capital enhancement and asset sales, to the Financial Supervisory Service within three months of receiving the designation notice.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.