Financial Sector Signs Agreement for COVID-19 Recovery Financial Support Including Creation of Chaean and Jeungan Funds

Eun Seong-su, Chairman of the Financial Services Commission (fourth from the left in the front row), Yoon Seok-heon, Governor of the Financial Supervisory Service, Yoon Dae-hee, Chairman of the Korea Credit Guarantee Fund, Lee Dong-geol, President of the Korea Development Bank, and other major bank presidents are taking a commemorative photo after signing the "Financial Support Agreement to Overcome the COVID-19 Crisis" on the 23rd at the Korea Federation of Banks in Jung-gu, Seoul.

[Asia Economy Reporter Kangwook Cho] Financial authorities and the banking sector have signed a financial support agreement to overcome the crisis caused by the novel coronavirus infection (COVID-19), including cooperation to establish a 10 trillion won-scale Bond Market Stabilization Fund (Cha-an Fund).

On the 23rd, the Financial Services Commission announced that it signed the "Financial Support Agreement to Overcome the COVID-19 Crisis" together with the Financial Supervisory Service, the Korea Federation of Banks, 19 banks, and 21 member institutions including the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation.

According to the agreement, banks will strive to supply ultra-low interest rate (1.5%) funds to small and medium enterprises (SMEs) and small business owners as efficiently as possible.

Additionally, banks will guide SMEs and small business owners to suitable financial products through branches and actively cooperate with the delegated work of regional credit guarantee foundations, which are experiencing delays due to recent surging demand, and faithfully perform the entrusted tasks.

Guarantee institutions will closely cooperate with banks regarding guarantee screening and non-face-to-face processing to ensure that SMEs and small business owners can receive the necessary funds as quickly as possible.

Banks will actively work to ensure that loan maturity extensions and interest payment deferrals can be smoothly implemented starting next month, refrain from loan recovery to maintain liquidity support effects for companies experiencing temporary cash flow difficulties (including affiliated large companies, large companies, and mid-sized companies), and participate in new fund support if necessary.

Along with this, banks will contribute to the establishment of the Bond Market Stabilization Fund and actively cooperate in increasing the fund size if needed, as well as actively cooperate in the prompt establishment of the Securities Market Stabilization Fund to stabilize the stock market.

The financial authorities made it clear that they will not hold issues against related work even if there are minor mistakes in these measures and will actively support banks' efforts to improve capital soundness.

A Financial Services Commission official explained, "This agreement was made with the understanding that resolving the funding difficulties of SMEs and small business owners directly or indirectly affected by COVID-19 to prevent bankruptcy risk is the foundation for real economic recovery and, ultimately, financial stability. It was carried out to faithfully implement the livelihood and financial stability package program announced on the 19th."

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