Banks offer support after trade restrictions

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Banks offer support after trade restrictions

Korea’s major banks and government agencies have kicked off a financial support drive to help companies affected by Japan’s export restrictions.

The Industrial Bank of Korea (IBK) will provide 300 billion won ($247.9 million) in loans with favorable interest rates to small- and medium-sized companies that could be impacted by Japan’s removal of Korea from a so-called white list of countries entitled to preferential treatment in trade.

The maximum loan ceiling for a company stood at 300 million won, the state-run bank said on Thursday.

Of the 300 billion won promised, 200 billion won will be reserved for companies seeking to invest in the research and development of parts and materials.

IBK vowed to expand its loan programs specifically designed for affected corporations.

“On top of that support, we are preparing for financial support designed to help enhance the competitiveness of SMEs in the mid- to long- terms,” a source at the bank said.

The Ministry of SMEs and Startups announced on Thursday that it will inject 558 billion won for SMEs as part of a supplementary budget that passed the National Assembly last week in the wake of Japan’s economic retaliations.

A hundred billion won will go toward companies whose business could be hit by Japan’s trade actions while 300 billion won is pledged for companies with plans to make investments on facilities and equipment.

The Korea Credit Guarantee Fund and Korea Technology Finance Corporation, two state-run credit guarantee agencies, also plan to offer 1.5 trillion won worth of loans for the affected SMEs through 2020.

The first batch of 500 billion won will be released in August.

Other financial groups including BNK have formed team to swiftly take measures in response to the tensions between Korea and Japan.

BNK Financial Group earmarked 200 billion for lending with interest rates that can be lowered as much as 2 percent for companies hit by export restrictions.

Shinhan Bank on Sunday said it will offer up to 1 trillion won and plans to open a center for consulting services.

The bank is also launching a team that specializes in loans to companies that manufacture components and materials that are usually imported in a bid to bolster Korea’s competitiveness in manufacturing.

In the meantime, the Financial Supervisory Service, the country’s financial watchdog, convened a meeting with the vice presidents of major banks on Wednesday to discuss measures aimed at easing the impact of Japan’s restrictions.

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