South Korea Proposes Fast-Track Resolution of Failing Banks Within Four Days

South Korea's Financial Services Commission on October 29, 2026, proposed an emergency framework designed to resolve certain failing financial institutions in three or four days, instead of the roughly 150 days authorities say existing procedures can require. The measure is a legislative proposal, not a system already in force.

The regulator plans amendments to the Act on the Structural Improvement of the Financial Industry and the Depositor Protection Act. The fast-track route would apply only when a financial company is insolvent or at risk of insolvency, its failure threatens wider financial stability, and existing supervisory tools are inadequate to contain the danger.

Covered institutions would include banks, insurance companies, securities firms, savings banks and financial holding companies. The proposal would permit expedited contract transfers, third-party acquisitions and other resolution measures while bypassing selected advance notices, bidding and corporate approval procedures that can delay action during a crisis. Approval by at least two-thirds of the Financial Services Commission's serving members would be required before designating a firm for emergency resolution.

The plan also seeks to preserve a safeguard for shareholders and creditors: their losses should not exceed what they would have suffered under ordinary liquidation or bankruptcy. An independent assessment after the resolution would determine whether compensation is owed from the deposit insurance fund.

The proposal follows international attention to rapid deposit withdrawals and the failure of Silicon Valley Bank in 2023. Korean officials argue that shortening the time between identifying severe financial distress and completing a transfer could reduce the chance of problems spreading to other firms.

The proposed amendments are expected to enter public consultation in November before further government review and consideration by lawmakers. There is no guarantee that the bills will pass unchanged, and the three-to-four-day target should not be interpreted as the duration of every future bank failure.