According to the Financial Supervisory Service on the 15th, Shinhan Financial Group was sanctioned by management for’crisis analysis work on internal capital’.
The Financial Supervisory Service conducts’Integrated Crisis Situation Analysis’, which analyzes the appropriate level of capital that the financial group can bear risks in crisis situations. Shinhan Holdings is a new subsidiary (Orange Life) when it recognizes the group’s available capital at the end of 2019. In addition, in calculating the risk, the total amount of risk compared to the available capital excluding new subsidiaries was calculated. The Financial Supervisory Service said, “When a new subsidiary is incorporated in the future, it is necessary to be careful not to cause such omissions.”
Shinhan Financial Group decided to acquire Orange Life in September 2018, followed by approval from the financial authorities in January 2019.
Shinhan Financial Group explained that in June 2020, it has completed the analysis of the group-integrated crisis situation by calculating the amount of risk including Orange Life. In addition, he emphasized that a new process was also established to check the adequacy of BIS equity capital ratio and internal capital, including subsidiaries, if there is a change in subsidiaries at the end of last year.
The Financial Supervisory Service also pointed out that Shinhan Holdings’ new real estate-related loans handled by Shinhan Card, a subsidiary subject to the Group’s internal rating method, were calculated as risk-weighted assets, including as asset classes with different risk attributes. Also, in the case of overseas real estate funds, as losses may occur due to the insolvency of overseas real estate, we were asked to set the nationality of the underlying asset as’overseas’ to manage the exposure of each country.
Shinhan Holdings said, “We will operate an internal process that strengthens prior consultation with the holding company risk management team when entering new products and new businesses, such as Shinhan Bank, Shinhan Card, and Jeju Bank, which are companies that apply the internal rating method within the group, during this month.” We plan to strengthen compliance with procedures such as changes.”
In addition, he added that if an investment country was selected in the alternative investment beneficiary securities from the end of last year, monitoring was conducted based on the nationality of that country, and from March this year, each country’s exposure limit will be set and reflected.
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