Its outstanding loans to small and medium-sized enterprises top 166 trillion won in Q1
The IBK signs an agreement on guarantees for small and medium-sized companies’ purchases with the KODIT, KIBO (Korea Technology Finance Corporation, the KBIZ and the Korea Federation of Credit Guarantee Foundations at the KBIZ headquarters in Yeouido, Seoul on May 25. From left are Chung Yoon-mo, chairman of KIBO, Yoon Dae-hee, chairman of the KODIT, Kim Ki-moon, chairman of the KBIZ, Yoon Jong-won, CEO of the IBK and Kim Byung-keun, chairman of the Korea Federation of Credit Guarantee Foundations. (Photo: KBIZ)
The Industrial Bank of Korea (IBK) announced in mid-April that it has signed an agreement with KBIZ to support small companies and small business owners in overcoming the novel coronavirus crisis.
Under the agreement, the Industrial Bank of Korea will provide 150 billion won in loans, of which 100 billion won entrusted by the KBIZ.
Those eligible for loans under the Yellow Umbrella Mutual Aid Program are small firms and small business owners who have been hit hard by the spread of the COVID-19 virus. The Industrial Bank of Korea automatically cut 0.75 percentage points from the loan rate, and is providing additional reductions based on transaction contributions and credit ratings.
The loan limit is set at up to 100 million won, depending on the bank’s review. Applications for loans will be available at IBK branches. “We hope that it will help small companies and small business owners unexpectedly suffering from the spread of the plague and serve as a base for overcoming the national crisis,” an IBK official said.
The IBK will provide 132 billion won worth of exclusive guarantees to support small and medium-sized companies’ joint purchases in cooperation with the KBIZ and three credit guarantee agencies.
The IBK signed an agreement with the KBIA and the three credit guarantee agencies at the headquarters of KBIZ in Yeouido, Seoul on May 25. The five organizations that participated in the agreement will provide a total of 132 billion won in guarantees to help small- and medium-sized enterprises and small business owners purchase raw materials.
In particular, the government will lower guarantee fees and lending rates to aid small businesses and small business owners affected by the spread of the epidemic.
The three guarantee agencies will lower guarantee fees by 0.5 percent. The IBK will cut its loan interest rate by up to 2.0 percentage points, depending on their credit ratings.
Under the agreement, the IBK and the KBIZ will each contribute 3.4 billion won in guarantee funds to three credit guarantee agencies so the total amount of the guarantee funds will hit 6.8 billion won.
Based on the guarantee funds, the three credit guarantee agencies will issue five-year warranty certificates worth 132 billion won.
Yoon Jong-won, president of the IBK, stressed the state-run bank’s efforts to expand loans to small- and medium-sized enterprises in the first quarter of 2020. As a capital increase is scheduled for the IBK the second quarter of this year as part of measures to deal with the new coronavirus crisis, the IBK is expected to increase its market share in the future.
According to the IBK on April 27, its outstanding loans to small- and medium-sized enterprises amounted to 166,522 billion won in the first quarter of this year. The figure rose 2.3 percent from the previous quarter.
It contrasted with a 0.8 percent drop in loans to large companies and the public and other sectors over the same period. The loans to small and medium-sized enterprises contributed to small and medium-sized enterprises’ financing while exceeding a 2.0 percent growth rate of household loans.
Unlike other large banks, the IBK maintained its stance to increase assets mainly for small and medium-sized companies even when its delinquency rate could rise.
In the meantime, Yoon visited Gwangju to check on small- and medium-sized companies suffering from sluggish domestic demand and collapsed export demand due to the novel coronavirus.
Yoon went to the city for a meeting with representatives of the companies, and visited auto parts industry sites affected by the suspension of production.
On the day, Yoon held a meeting with representatives of small and medium-sized companies which supply or sell products to large companies. At the meeting, they talked about their difficulties such as financial difficulties caused by sluggish sales and asked Yoon for necessary financial supports.
“The IBK will continue to provide effective financial support to companies suffering from temporary liquidity difficulties,” Yoon said during the meeting. “We will also help companies restructure themselves through consulting services.”