The Financial Services Commission has reviewed the crisis response plans of five major financial groups and five banks that could significantly impact the domestic financial system. With the increasing threat of cyber attacks and large-scale withdrawals through mobile banking, the related response systems have been further strengthened.
On July 15, the Financial Services Commission announced the approval of self-recovery plans from ten 'systemically important financial institutions' and a resolution plan prepared by the Korea Deposit Insurance Corporation. The institutions include Shinhan, KB, Hana, Woori, and NongHyup Financial Groups, as well as Shinhan, Kookmin, Hana, Woori, and NongHyup Banks.
The self-recovery plans outline measures for financial companies to stabilize themselves through capital increases or liquidity management in the event of a management crisis. The resolution plans are scenarios for the Korea Deposit Insurance Corporation to manage the financial institutions while minimizing market disruption if self-recovery is not feasible. Both plans have been developed annually since 2022.
In this year's plans, the Financial Services Commission has called for strengthening the response system to cyber incidents and refining indicators to address the potential for 'digital bank runs' through mobile banking. It also requested enhancements to consider scenarios where multiple financial institutions implement self-recovery measures simultaneously during a financial crisis.
The resolution plan established by the Korea Deposit Insurance Corporation has been updated to diversify funding sources for resolution during market instability and to enhance effectiveness for rapid response in actual crisis situations. The Financial Services Commission plans to further supplement the valuation system and strategies for responding to digital bank runs.
In the second half of the year, the Financial Services Commission will conduct a joint drill involving the Financial Supervisory Service, the Korea Deposit Insurance Corporation, and financial companies to test the response systems in real crisis situations. The Commission expressed hope that these plans will enhance the crisis response capabilities of large financial institutions and strengthen the stability of the financial system.
* This article has been translated by AI.
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