South Korea’s FSC relaxes regulations on LLRs

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By Addison Gong
13 Oct 2016

The South Korean government is set to ease rules on loan loss reserves (LLR) in a boost to banks’ regulatory capital ratios. But the changes, announced on October 7 by the Financial Services Commission, could leave lenders less prepared for IFRS 9. Fitch Ratings has warned.

LLRs under the International Financial Reporting Standards are typically lower than the Korean regulatory minimum loan loss provision requirement. But banks in the country currently put aside the difference between the two as their additional LLR, which is neither recognised as regulatory capital, nor is it dividend payable.

That ...

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