Today the Basel Committee on Banking Supervision published reports assessing the implementation of the Basel risk-based capital framework and the Liquidity Coverage Ratio (LCR) for Argentina and Korea. These form part of a series of reports on Basel Committee members’ implementation of Basel standards under the Committee’s Regulatory Consistency Assessment Programme (RCAP). A key component of the RCAP is to assess the consistency and completeness of a jurisdiction’s adopted standards and the significance of any deviations from the regulatory framework. The RCAP does not take account of a jurisdiction’s bank supervision practices nor does it evaluate the adequacy of regulatory capital and high-quality liquid assets for individual banks or a banking system as a whole.
Overall, the assessment outcomes for both Argentina and Korea are positive and reflect various amendments to the risk-based capital and LCR rules undertaken by the authorities during the respective assessments. The Basel Committee noted that several aspects of the domestic rules in both countries are more rigorous than required under the Basel framework.
Argentina
Overall, the domestic implementation of the risk-based capital framework is found to be “compliant” with the Basel standards. Ten of the 11 assessed components of the framework are assessed as compliant and one – the scope of application – is assessed as “largely compliant”. Argentina is also assessed as “compliant” with the Basel LCR standards, including the LCR regulation and the LCR disclosure standards. A compliant assessment grade is the highest of the four possible grades.
Korea
Overall, the domestic implementation of the risk-based capital framework is found to be “largely compliant” with the Basel standards, reflecting the fact that most but not all provisions of the Basel standards are satisfied. Specifically, 12 of the 14 components of the framework are assessed as compliant while two components – the definition of capital and the transitional arrangements – are assessed as largely compliant and “materially non-compliant”, respectively. A “largely compliant” assessment grade is one notch below the highest possible grade. Regarding the LCR, Korea is assessed as “compliant” with the Basel LCR standards, including the LCR regulation and the LCR disclosure standards.
In carrying out the reviews of Argentina and Korea, the assessment teams held discussions with senior officials and technical staff of the Central Bank of Argentina and the Financial Supervisory Service of Korea. The teams also met with a select group of banks in both countries.
