[Digital Today reporter Ji-young Lee] South Korea's Financial Services Commission has selected the five major financial holding groups (KB, Shinhan, Hana, Woori and NongHyup) and their affiliated banks as domestic systemically important banks and bank holding companies for 2027. The selected firms will remain subject to a 1 percent additional capital buffer next year, but the outcome is unchanged from the previous selection, meaning no new capital burden is expected to arise.

The FSC said on July 31 it held its 14th regular meeting and selected 10 banks and bank holding companies as domestic systemically important banks and bank holding companies (D-SIBs) and domestic systemically important financial institutions (D-SIFIs) for 2027.

Among bank holding companies, Shinhan Financial Group, Hana Financial Group, KB Financial Group, Woori Financial Group and NongHyup Financial Group were selected. The banks included Shinhan Bank, Woori Bank, KB Kookmin Bank, Hana Bank and NH NongHyup Bank, unchanged from the previous year.

The D-SIB framework strengthens supervision to reduce the shock that distress at large financial companies can have on the financial system and the real economy. It was introduced domestically in 2016, and selected banks and bank holding companies are required to build additional capital.

The FSC assessed systemic importance for domestic banks, domestic branches of foreign banks and bank holding companies using 12 indicators across five areas, including size, interconnectedness and substitutability.

The assessment found 12 companies, including the Korea Development Bank and Industrial Bank of Korea, exceeded the 600 basis point minimum threshold for D-SIB selection. However, KDB and IBK were excluded from the final selection, considering factors such as their status as public institutions with government shareholdings and legal provisions for government loss compensation.

The 10 companies selected as D-SIBs were also designated as D-SIFIs under the Financial Holding Companies Act. As a result, they are subject to the recovery plan and resolution plan regimes.

Selected financial companies will be subject to a 1 percent additional capital buffer in 2027. The resulting minimum required capital ratios are 9 percent common equity tier 1, 10.5 percent tier 1, and 12.5 percent total capital.

The FSC explained that, as of end-2025, capital ratios at all 10 banks and bank holding companies exceed the minimum required levels for 2027. It also expected there would be no substantive additional capital-building burden from this designation because the selection results are the same as the previous year.

Companies selected as D-SIFIs must submit recovery plans to the Financial Supervisory Service within three months from the date they receive notice of selection.