Korea Development Bank (KDB) reinforced its role as policy loan provider. The KDB launched the New Start KDB Prime Rate Loan to support small and medium-sized companies and thus back up the government’s Creative Economy goals, according to KDB officials recently.
The special loan product, operating on a 2 trillion won budget ($1.8 billion), will offer an interest rate benefit to SMEs that seek loans to improve their management or to expand facilities.
The maximum interest rate cut is 1 percent for the Korean won, and 0.4 percent for other currencies such as the U.S. dollar, yen and euro.
“SMEs are the key players in the nation’s economic growth and creation of jobs,” said a KDB official.
“As the largest state-run policy financing institution, we will continuously work to expand our exclusive services for SMEs.”
A special fund to back the overseas expansion of SMEs was also introduced, in order to minimize the investment risks for export companies and to encourage them to pioneer new sources of revenue in the global market.
The special fund will operate on a budget of 500 billion won, among which 300 billion won has been allocated exclusively to SMEs.
Export companies may enjoy an interest rate cut of up to 0.5 percent when taking a loan out in won.
“The increasing volatility of the global financial market has made it difficult for Korean companies to make profitable investments,” the official said. “The purpose of the fund is to support SMEs to (help them) overcome current hardships and to make inroads into the market.”
To execute these projects, the KDB is planning to execute 35 trillion won, or 55.4 percent, of its yearly budget within the first half of the year, hoping that the financial benefits may revitalize the nation’s economy.
In January this year, the KDB kicked off integrated policy financing.
Korea Development Bank (KDB), South Korea's largest provider of ship financing, recently signed a memorandum of understanding (MOU) with the country's Ministry of Oceans and Fisheries to co-operate with overseas port investments.
In a press statement KDB said, "The purpose of this MOU is to boost joint overseas market entry with domestic construction companies and port operators and enhance global competitiveness of the port industry. To achieve this goal KDB and the ministry will work together in terms of digging out and developing new port project in the global market."
Chaebol-linked construction firms such as Samsung C&T, Hyundai Engineering & Construction, and SK Engineering & Construction, are heavily involved in port construction projects in South Korea and elsewhere.
Local shipping firms Hanjin and Hyundai Merchant Marine are also involved in operating terminals worldwide.
The ministry will choose a project and then negotiate with foreign governments, construction companies, and port operators. KDB will advise on financial matters, arrange financing, and attract investors.
The two will cooperate in developing overseas port businesses and feasibility studies.
KDB said, "We will advise on financial matters and be in charge of arranging finance for the overseas port business. The ministry, being a port specialist, will lead in developing related businesses. As a result, the MOU aims to get a foothold in overseas markets for domestic players in the port business."
KDB Financial Group Chairman Hong Ki-taek said, "KDB will regard this MOU as being an ideal model that shows a financial institution (that) strongly supports government policy. Also, the MOU will be an opportunity to expand our overseas project financing.
Korea Development Bank was founded in 1954 in accordance with the Korea Development Bank Act to finance and manage major industrial projects to expedite industrial development and enhance the national economy. As Korea’s representative development financing bank, No. 1 arranger in Asia-Pacific project finance market and leader of the domestic capital market, KDB has fostered the growth and heightened the competitiveness of strategic industries by meeting their changing financial needs. Following public policy, KDB facilitates the management normalization of troubled companies through corporate restructuring and consulting services, and provides capital for strategic regional development projects.
Through a network of 40 domestic branches, seven overseas branches, five overseas subsidiaries, two representative offices, and three domestic subsidiaries, KDB provides a full range of financial services. It has more than 2,100 employees.
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