Korea's 5 major banking groups designated systemically important financial institutions for 2027

The Financial Services Commission on Friday designated 10 institutions — including KB, Shinhan, Hana, Woori and NH NongHyup financial groups and their affiliated banks — as domestically systemically important banks and bank holding companies (D-SIBs) for 2027.

The same 10 institutions were also designated as domestically systemically important financial institutions (D-SIFIs).

The D-SIB regime was introduced in South Korea in 2016 following recommendations by the Financial Stability Board and the Basel Committee on Banking Supervision to strengthen oversight of large financial institutions and minimize the impact their potential failure could have on the financial system and the broader economy. Since 2021, institutions designated as D-SIBs have also been classified as D-SIFIs under the Act on the Structural Improvement of the Financial Industry, subjecting them to self-recovery and resolution planning requirements.

The FSC said it arrived at the designations by assessing the systemic importance of domestic banks, foreign bank branches and bank holding companies across five categories and 12 indicators, including size, interconnectedness and substitutability.

Banks and bank holding companies designated as D-SIBs will be required to hold an additional 1 percent capital buffer next year. Because the list of designated institutions is unchanged from the previous year, no additional capital burden is expected in practice.

As of the end of last year, the 10 banks and bank holding companies held an average Bank for International Settlements (BIS) capital ratio of 14.10 percent, well above the 9.0 percent minimum capital requirement set for 2027.

The designated institutions must submit a self-recovery plan — outlining measures to address a potential management crisis — to financial regulators within three months of receiving official notification of their designation.