South Korea to Stress-Test Banks Amid Global Financial Strains

South Korea will conduct a stress test on the banking sector in line with global standards to ensure financial stability.

(Bloomberg) — South Korea will conduct a stress test on the banking sector in line with global standards to ensure financial stability.

The Financial Supervisory Service and the Bank of Korea will jointly perform the exercise under guidelines of the Basel Committee on Banking Supervision and the Financial Stability Board, they said in a statement on Monday. 

The test will analyze domestic banks’ capital adequacy, estimated losses from offshore exposures and potential contagion from overseas financial institutions, according to the statement.

Concerns over the outlook for the global banking system have increased following the collapse of regional banks in the US and emergency takeover of Credit Suisse Group AG last month. 

Read more on Credit Suisse’s outflows 

The stress test will help regulators assess local banks’ soundness by comparing their potential risk factors with those of global banks, according to the statement. 

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