The Deposit Insurance Committee and the Financial Services Commission have the authority to declare a financial institution insolvent or insolvency-threatened when its financial status is so unsound that it is unlikely to return to normal operation.

The KDIC chooses the most appropriate method among the following to resolve a failed financial institution in the least costly manner:

Deposit Payouts

A resolution method that is used when liquidation of the failed financial institution is determined to be the least costly method or when no assuming institution can be found.

Purchase & Assumption (P&A)

A healthy financial institution purchases some or all of the assets and assumes deposit liabilities of a failed financial institution.

Bridge Bank

A temporary financial institution is established and operated by the KDIC on an interim basis to acquire the assets and assume the liabilities of a failed institution until the final resolution is accomplished.

OBA

The KDIC provides financial assistance to a failing insured financial institution through equity participation, contribution or purchase of assets, and acquires its shares in return.