Gov't, banks to offer businesses $57B in financial support

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Gov't, banks to offer businesses $57B in financial support

Published: 15 Feb. 2024, 17:11

JIN MIN-JI
[email protected]

Financial Services Commission Chairman Kim Joo-hyun speaks in a conference with the heads of banks in central Seoul on Thursday. [YONHAP]

The Korean government and local banks will finance 76 trillion won ($57 billion) to help companies invest in new advanced technologies like chips and reduce their interest burdens.

The Financial Services Commission (FSC) said on Thursday the government and five commercial banks – KB Kookmin, Shinhan, Hana, Woori and NongHyup – will cut corporate interest rates and extend project financing loans to fund long-term projects amid persistently high interest rate as companies cope with declining sales and exports.

State-run and commercial banks will spend at least 26 trillion won to finance investments in the development of advanced high-tech industries including semiconductors, secondary batteries and biotechnology.

These industries are expected to require a total of more than 600 trillion-won worth of investment by 2030, but around 70 percent of large businesses have secured less than 60 percent, according to the FSC.

Another 15 trillion won will be spent on mid-sized companies in the form of a fund for investments, a loan program with a low interest rate and bond issuance financing.

The FSC said these mid-sized corporations, which account for 1.5 percent of all companies by number but 16.1 percent of overall corporate revenue, have long been excluded from policy support measures.

The average rate on corporate loans extended by banks reached 5.29 percent last year, up from 3.14 percent in 2021 and 2.84 percent in 2020.

“Competitiveness of our companies is the future of Korea’s economy,” said FSC Chairman Kim Joo-hyun in a conference with the heads of banks in central Seoul. “For Korean companies to continuously grow in a rapidly changing business environment, they need to secure new competitiveness through changes, requiring active financial support in the process.”

Korea’s relations with China is shifting from complementary into a competitive relationship amid the neighboring country’s rapid technological development, Kim said. He also noted the restructuring of the existing global supply chain network triggered by the creation of economic blocs centered on advanced nations, like the United States, China and European nations.

“It’s time we quickly and effectively respond to new challenges for the future of our companies and the economy,” Kim added.

Ahn Duk-geun, the Minister of Trade, Industry and Energy, said the latest financial support will help the country achieve its annual goal of reaching $700 billion in exports and 150 trillion won in private investment of this year.

Commercial banks are financing 20 trillion won for the support measures.

BY JIN MIN-JI [[email protected]]