The FSC announced that Basel III capital regulations will be phased in to domestic banks from December 1, 2013, as part of strengthened prudential regulations for banking sector which have been under discussion since the global financial crisis.
Banks will be required to meet detailed adequacy ratios and minimum requirements for each category of capital. Moreover, qualifying conditions for each capital class will be modified to enhance quality of banks’ capital.
From January 2016, banks will be required to hold ‘capital conservation buffer,’ more than a 0.625%p plus the minimum capital adequacy ratio. If banks failed to meet the minimum requirement of capital conservation buffer, their pay-outs of dividends or purchases of their own shares would be gradually limited.
Upon implementation the FSC will continue to monitor progress in order to ensure that the Basel III will not affect banks to reduce their lending to SMEs and low-income households, while strengthening banks’ soundness.