Support for Key Industry Partners to Begin Next Week

Financial Services Commission, Financial Risk Response Team Meeting
27 Billion KRW Support for Auto Parts Companies This Month

Son Byung-du, Vice Chairman of the Financial Services Commission / Photo by Jin-hyung Kang aymsdream@

[Asia Economy Reporter Kim Hyo-jin] Financial support for key industry partner companies will begin next week. According to the 'Automobile Parts Industry Partner Support Program' launched earlier this month, approximately 270 billion KRW has been provided so far.

On the morning of the 28th, the Financial Services Commission (FSC) explained this at a Financial Risk Response Team meeting chaired by Vice Chairman Son Byung-du at the Korea Federation of Banks in Jung-gu, Seoul.

Under this program, the FSC has confirmed that KDB Industrial Bank has provided 157.6 billion KRW and IBK Industrial Bank has provided 111.1 billion KRW in support to date.

The government, recognizing that the ecosystem of the automobile industry is in crisis due to the impact of the novel coronavirus disease (COVID-19), has prepared a support program including special guarantees worth '2 trillion KRW + α' involving financial public institutions, completed car manufacturers, and local governments.

Additionally, the FSC plans to start support next week after finalizing the operational plan for the key industry partner support program last week and completing business agreements with banks.

The government intends to supply a total of 5 trillion KRW in operating funds loans to key industry partner companies.

A special purpose vehicle (SPV) established with a 1 trillion KRW investment from the Key Industry Stabilization Fund will purchase partner company loan claims from commercial banks and issue securitized bonds (P-CLO).

Eligible companies are those established before May 1 of this year and operating within industries supported by the Key Industry Stabilization Fund, such as aviation and shipping.

The FSC also announced that the low-credit corporate bond and commercial paper (CP) purchase institution began buying on the 24th and has supported a total of 552 billion KRW (15 companies) so far.

Meanwhile, Vice Chairman Son stated at the meeting that regarding the government's 'Korean New Deal' project, "New challenges in emerging industries involve risks," and emphasized the need to share and diversify risks by utilizing New Deal funds, venture capital, and policy finance involving financial and private capital participation.

He added, "Especially, the expanded market liquidity during the COVID-19 crisis response should be used as a driving force for the Korean New Deal project and flow into productive sectors," and said, "We will actively expand the role of finance so that the Korean New Deal can become a new investment destination that meets the diverse demands of the public."

He also mentioned plans to prepare for the 'post-COVID' era through strategic financial support for reshoring companies and support for innovative companies and startups via the 'Innovative Companies 1000' program.

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