2014年-IMF国际货币组织全球_Republic_of_Korea_Report_on_the_Observance_of_Standards_and_Codes_73页_871kb

Summary of IMF Country Report No. 14/127: Republic of Korea

Core Content

The IMF Country Report No. 14/127 provides an assessment of the implementation of the Basel Core Principles (BCP), CPSS-IOSCO Principles for Financial Market Infrastructures (PFMI), and IOSCO Objectives and Principles of Securities Regulations in the Republic of Korea. The report was prepared as background documentation for the periodic consultation with the Republic of Korea and based on information available up to December 24, 2013. It outlines the regulatory and supervisory framework, identifies main findings, and recommends actions to improve compliance and supervisory effectiveness.

Main Findings

Basel Core Principles for Effective Banking Supervision

• Regulatory and supervisory framework: The Republic of Korea has a large and diversified financial sector, with total assets of banks and non-bank financial institutions reaching 310% of GDP in 2012. The financial system is dominated by 12 Financial Holding Companies (FHCs), which account for 50% of financial sector assets.
• Compliance with BCP: Korea has a moderate level of compliance with the BCP. The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) operate under an integrated supervisory approach.
• Supervisory tools and reporting: The FSS uses a comprehensive off-site supervisory system with detailed data collection. On-site examinations are conducted every two years and are supported by checklists and guidance. However, there is room for improvement in the risk-sensitive approach and the frequency of examinations.
• Corporate governance and risk management: There is a strong focus on quantitative indicators in off-site supervision, but the analysis of broader risk management factors is lacking. Corporate governance practices should be further developed to ensure more intrusive assessment.
• Capital adequacy: The banking sector has a healthy buffer above the Capital Adequacy Ratio (CAR) of 14.3% in 2012. The FSC-FSS aims to implement Basel III by December 2013. The extension of Basel II to FHCs is expected to improve consistency and comparability of capital standards.
• Liquidity management: Banks have strong liquidity ratios, especially for foreign currency liquidity. The transition to the Basel III Liquidity Coverage Ratio (LCR) framework is expected to enhance liquidity risk management.
• Provisioning: Prudential regulations on loan loss provisioning have been strengthened. However, there are areas for improvement, especially in the case of loans returning from non-performing to performing status.
• Credit risk: Credit risk remains the most relevant risk in the banking system. The FSC-FSS monitors credit portfolios closely, but greater attention is needed to ensure effective credit risk management.
• Consolidated supervision: The FSC-FSS has made progress in implementing consolidated supervision through the FHC Act and the RFI. However, the framework is not yet comprehensive enough to fully understand group-level risks and inter-group transactions.
• Home-host relationships: Information-sharing mechanisms and cross-border crisis handling procedures are not yet fully established, despite efforts by the FSC-FSS to develop standards for D-SIBs.

CPSS-IOSCO Principles for Financial Market Infrastructures (PFMI)

• Financial Market Infrastructures (FMIs): The report assesses the compliance of the BOK Wire+ and KRX-CCP with the CPSS-IOSCO Principles. Both systems are considered to be in compliance with the essential criteria but require further improvements in risk management, transparency, and governance.
• Recommended actions: Enhancements to the governance arrangements, risk management processes, and transparency of FMIs are suggested. The report also recommends the development of a recovery and resolution plan for the BOK Wire+ and KRX-CCP.

IOSCO Objectives and Principles of Securities Regulations

• Institutional and market structure: The Republic of Korea has a well-developed securities market with the Korea Exchange (KRX) as the main market operator. The FSC is the main regulatory authority.
• Securities regulation: The legal and institutional framework for securities regulation is considered sound, but there is a need for greater transparency and clarity in the implementation of the principles.
• Supervisory response: The authorities have responded to the assessment with a commitment to improve compliance and supervisory effectiveness through regulatory reforms and enhanced oversight.

Key Recommendations

• Strengthen risk-sensitive supervision and increase the frequency of on-site examinations.
• Improve governance arrangements for Financial Holding Companies (FHCs) and Financial Market Infrastructures (FMIs).
• Enhance transparency and accountability in the supervisory process.
• Implement more stringent prudential requirements for banks based on risk profile and systemic importance.
• Develop recovery and resolution plans for FMIs to ensure safety and efficiency.
• Improve corporate governance practices across the financial sector, particularly in non-bank institutions.
• Strengthen external audit processes and ensure that the FSC-FSS has the authority to assess audit quality.
• Enhance compliance with Basel III for FHCs and ensure consistent application of capital, liquidity, and risk management requirements across the group.

Conclusion

The Republic of Korea has made progress in implementing the Basel Core Principles and CPSS-IOSCO Principles for Financial Market Infrastructures. However, there are areas for improvement, particularly in the areas of risk management, governance, and supervisory effectiveness. The report highlights the importance of consolidated supervision, transparency, and risk-based approaches to ensure the stability and resilience of the financial sector.