JB Financial gets approval for internal ratings-based approach
The headquarters of Jeonbuk Bank, the flagship affiliate of JB Financial Group, are seen in Jeonju, North Jeolla Province, in this undated file photo. Korea Times file
By Yoon Ja-young
JB Financial Group got regulatory approval to use an internal ratings-based (IRB) approach for credit risk assessment under the Basel III framework.
According to the holding group of Jeonbuk Bank and Kwangju Bank, Tuesday, JB Financial Group received final approval from the Financial Supervisory Service (FSS) a year after it had filed for approval in June last year.
The holding group and Jeonbuk Bank received approval this time while Kwangju Bank adopted the IRB approach back in 2012. The group explained that it started preparing for the adoption of the new approach back in 2018. It completed development for the internal model last year.
The IRB approach allows banks to use their own credit assessment model in calculating risk-weighted assets on credit risks. Typically, this approach pulls up the capital ratio. The capital ratio is the ratio of a bank's capital to its risk.
“We expect the approval of the IRB approach to pull up our capital ratio by 1 percentage point. Based on the improved capital ratio, we plan to contribute more to the regional economy by strengthening support for small merchants and small and medium-sized enterprises,” an official at JB Financial said.
Thanks to the rise in capital ratio as a result of the IRB approach adoption, JB Financial is also expected to accelerate shareholder-friendly policies.