Financial Authorities and Banks "Cooperate to Establish COVID-19 Response Credit Support Fund"

Eun Sung-soo, Chairman of the Financial Services Commission (far right), is presiding over a meeting among banks related to COVID-19 at the Bankers' Hall in Jung-gu, Seoul, on the 20th, delivering opening remarks.

[Asia Economy Reporter Kim Hyo-jin] Financial authorities and the banking sector have agreed to join forces to establish a bond market stabilization fund exceeding 10 trillion won. Banks also committed to actively providing ultra-low interest loans to small business owners in urgent need of funds.

Eun Sung-soo, Chairman of the Financial Services Commission, and the heads of eight banks including KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup, KDB Industrial, IBK Industrial Bank, and Jeonbuk Bank held a meeting on the morning of the 20th at the Bankers' Hall in Jung-gu, Seoul, to discuss measures in response to the novel coronavirus infection (COVID-19).

Chairman Eun emphasized the importance of the responsible role of banks to ensure the smooth reactivation of the bond market stabilization fund, which was jointly established by the financial sector during the 2008 financial crisis.

The financial authorities and the banking sector agreed that the fund should be established on the scale of 10 trillion won, led by the banking sector as per existing agreements, to ensure timely execution of the fund, and that they would actively cooperate in increasing the fund size depending on the pace of fund depletion.

The government decided to establish the bond market stabilization fund at the first emergency economic meeting held the previous day. Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki stated, "We will do our best to bring warmth back to the market by leveraging the experience and operational expertise gained from the bond market stabilization fund that contributed to overcoming the 2008 global financial crisis."

Specific details regarding the establishment method and scale are expected to be announced at the second emergency economic meeting next week.

The bank heads also agreed to make efforts to actively support small business owners who have suffered direct or indirect damage from COVID-19 with ultra-low interest funds at 1.5% through commercial banks.

The financial authorities explained that the bank heads also agreed on the necessity for small business owners with good credit ratings to receive the required funds more quickly from commercial banks with dense branch networks rather than from policy financial institutions.

In this regard, the financial authorities and commercial banks plan to provide 3.5 trillion won in bank interest subsidy loans to small business owners affected by COVID-19 starting early next month, following practical consultations.

The interest subsidy will be provided by covering 80% of the banks' monthly support performance through fiscal support, with the remaining 20% borne by the banks. The program is scheduled to operate until the end of this year, with a loan limit of 30 million won. Collateral, guarantees, and unsecured loans are all included.

This content was produced with the assistance of AI translation services.