PwC's Managing upstream risk: Regulatory reform review - An asian perspective August 2013 | Page 10

South Korea
Bank holding companies will be required to comply with revised global capital rules from 1 December 2013 as part of efforts to beef up their financial health in line with international standards. The FSC will impose the Basel III capital requirements – 4.5 per cent of common equity; 6 per cent of Tier 1 capital, which includes common stocks and retained earnings; and at least 2.5 per cent of hybrid or subordinated bonds.

meeting their LCR requirements through their own balance sheet management, before relying on the CLF; • ADIs must meet relevant qualitative and quantitative liquidity requirements, including having in place a statement of the Board’s tolerance for liquidity risk, an appropriately robust liquidity transfer pricing mechanism, and appropriate remuneration arrangements for those executives responsible for the ADI’s funding plan and liquidity management; • The CLF will be available to address Australian dollar liquidity needs only; and • The size of the CLF for each ADI will be limited to a specified percentage of that ADI’s Australian dollar net cash outflow target as agreed by APRA, plus an allowance for an appropriately sized buffer.

Australia
On 8 August 2013, APRA released a note for ADIs providing further detail on its approach to the implementation of the Basel III liquidity framework and on the operation of the committed liquidity facility. The main steps in the process are: • ADIs will be required to apply for inclusion of a CLF for LCR calculation purposes on an annual basis; • ADIs will be required to demonstrate they have taken ‘all reasonable steps’ towards

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Regulatory Reform Review | Banking