South Korean Banks’ Capital Adequacy Ratio Rises to 14.62%

South Korean banks’ capital adequacy ratio rose in the third quarter as lenders reduced riskier assets, and a stricter gauge of capital health climbed to a record, the country’s financial regulator said.

The ratio, a measure of capital reserves against assets at risk, gained at Korea’s 18 banks to an average 14.62 percent at the end of September from 14.29 percent three months earlier on a preliminary basis, the Financial Supervisory Service said in a statement. The average Tier 1 ratio reached 11.75 percent, the highest since the figures were first compiled in 1992.

The Group of 20 nations wants global banks to keep more capital and easy-to-sell assets to prevent a repeat of the worst financial crisis since the Great Depression. G-20 leaders last month endorsed rules, known as Basel III, which will more than triple the highest-quality capital, such as shareholders’ equity, that banks must hold to cushion against losses.

Korea’s banking regulator said it plans to guide lenders to keep sufficient capital. The Basel Committee on Banking Supervision said on Dec. 1 that it agreed on the details of the Basel III rules text.

Banks’ combined risk-weighted assets including domestic- and foreign-currency loans and derivatives dropped by 16.4 trillion won ($14 billion) as a stronger won reduced the value of foreign-currency holdings, the statement said. Equity capital increased by 1.2 trillion won.

Citigroup Inc.’s South Korean unit, Citibank Korea, posted the highest capital adequacy ratio of commercial lenders under Basel regulations at 17.23 percent, followed by 16.26 percent at Shinhan Bank, the lending unit of Shinhan Financial Group Co., the FSS said.

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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