The Industrial Bank of Korea (IBK) has successfully issued $300 million in GDRs at a price of $11.39 per issue, down 4.4 percent from the closing price of April 11, which is way lower than the average discount rate for GDRs issued in Asia in the past year, the bank said recently.
IBK has issued GDRs against its own 26.2 million shares that it took over from the government last year and will list them on the Luxemburg Stock Market on June 22, the bank said.
A ceremony for the issuance of GDRs took place in Hong Kong on June 15 with President Kwon Seon-joo and Asian representatives of the firms managing the listing including Goldman Sachs, Citi Global Market Securities, and UBS.
IBK officials said they have issued GDRs to preemptively boost its capacity to provide financial support to SMEs. It would also be a great help in keeping IBK’s share prices stable in the stock market as it will secure long-term investors and at the same time solve potential shortages of its shares, they said.
In the meantime, IBK signed an agreement on June 17 with the National Health Insurance Service on providing financial support to hospitals including medical clinics and pharmacies.
The national health insurance service selected IBK based on its evaluation of various financial institutions through the Application Evaluation Committee and the bank will have to honor the agreement until June, 2016, the health insurance service said.
Applicants for loans under the agreement are required to submit the applications to IBK branches. Loans will be provided based on the annual amount of medical service payments they will receive from the national health insurance service and will be repaid by the national health insurance service automatically out of the applicant’s medical or pharmaceutical product service and sales charges.
IBK will provide loans to the medical clinics and pharmacies at discounted interest rates with fees exempted so that the borrowers will be able to reduce their financial expenses, lessening their burdens for securing operational funds and payments of interest on their loans.
The medical clinics and pharmacies that have bank loans under the special arrangement totaled 3,617 since 2005 when the program started with outstanding loans totaling 1.7 trillion won.
The national health insurance service started the program to help medical clinics, hospitals, and pharmacies run their organizations stably, providing better medical services with loans they received under the special financial program, the national health service said in explanation of why they initiated the program.
In the meantime, President Kwon Seon-joo of IBK participated in a meeting for banks hosted by the Financial Supervisory Service (FSS) to discuss the financial problems for SMEs that are engaged in exports.
The representatives of SMEs told the participants their problems, like the high value of the Korean won, and asked for help from the financial institutions, especially the foreign exchange authorities, regarding their problems stemming from quick changes in the exchange rates of the won versus foreign currencies such as the U.S. dollar and Japanese yen.
Gov. Choi Soo-hyun of the FSS said they plan to lead the banks to increase their loans to SMEs and also have them provide an education on how to deal with the dangers from sudden changes in the foreign exchange rates. He went on to add that the FSS and banks, along with related organizations will jointly hold sessions to explain the means to deal with foreign exchange issues and other financial support to SMEs engaged in exports.
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