Banks and financial holding firms in South Korea will be required to set aside additional capital reserves to bolster their ability to absorb losses, the financial regulator said Wednesday. The Financial Services Commission posted a notice of a change to capital requirements for 17 local banks and eight financial holding firms, which would require them to set aside up to 2.5 percent of their assets as a stress capital buffer (SCB). The new SCB requirements will likely be implemented before the end of the year following the required 10-day notice of the planned change, the financial regulator said. The FSC explained new internet-only banks and their holding firms will be given a two-year grace period. A capital buffer refers to mandatory capital that financial institutions are required to hold in addition to other minimum capital requirements. Currently, local banks and their holding firms are required to hold up to 9 percent of their assets under various capital requirements, including a 1 percent count ercyclical capital buffer implemented in May, according to the FSC. "The financial government has been pushing to revise related regulations since unveiling its plan to boost the fiscal soundness of banks as part of efforts to enhance their loss-absorbing capacity in March 2023," it said. "The planned introduction of the stress capital buffer is part of follow-up measures for such efforts." Source: Yonhap News Agency