Draft Fund 'Surplus' at KDB, Financial Support for Ssangyong Motor NO but YES for Partners

40 Trillion Won Kian Fund Has Ample Capacity but Says 'NO' to Ssangyong Motor Support
Enough Capacity to Expand Support for Ssangyong Motor Partners
'Partner Company Operating Fund Support Program' Available Within Kian Fund
Loan Handling Period Extended Until End of April
'Cheer Up Korea Special Operating Fund' Limit Expanded to 1.5 Trillion Won

[Asia Economy Reporter Park Sun-mi] As Ssangyong Motor and its suppliers face worsening financial difficulties, there is growing weight to the possibility that KDB Industrial Bank will expand financial support for the suppliers.

According to the automotive and financial industries on the 4th, although Industrial Bank maintains its existing position that Ssangyong Motor cannot be included in the list of recipients for the Industrial Fund for Stabilization of Key Industries (Industrial Fund), there is a possibility of additional support for suppliers using funds within the Industrial Fund, as there have been cases of support for suppliers.

Since the launch of the 40 trillion won Industrial Fund in May last year, the only companies approved to use the fund so far are Asiana Airlines (2.4 trillion won) and Jeju Air (32.1 billion won). Based on the approved amount of financial support, only about 6% of the fund has been used. Ssangyong Motor has requested financial support from Industrial Bank using the Industrial Fund, but Industrial Bank continues to repeat its existing stance that "Ssangyong Motor is not eligible for Industrial Fund support" at this point.

To receive support from the Industrial Fund, three conditions must all be met: ▲borrowings of 500 billion won or more, ▲300 or more employees, and ▲direct difficulties caused by COVID-19. Industrial Bank does not consider Ssangyong Motor’s problems to be due to COVID-19.

Industrial Bank Operating ‘Operating Fund Support Program for Key Industry Suppliers’ within the Industrial Fund

On the other hand, Ssangyong Motor’s suppliers have the opportunity to additionally utilize the Industrial Fund, which has a low utilization rate and sufficient support capacity. Industrial Bank operates the ‘Operating Fund Support Program for Key Industry Suppliers’ within the 40 trillion won Industrial Fund. Among the industries eligible for Industrial Fund support, small and medium-sized enterprises and mid-sized companies selected as essential for maintaining the industrial ecosystem in collaboration with primary contractors and relevant ministries are eligible for support.

Even though Ssangyong Motor is not eligible for Industrial Fund support, the automotive industry belongs to the nine industries eligible for Industrial Fund support, including aviation, shipping, shipbuilding, machinery, steel, aircraft manufacturing, refining, and petrochemicals, so Ssangyong Motor’s suppliers can use the program. Since the program’s launch in August last year, a total of 93 companies have received 272.4 billion won in support, and it is known that quite a few of these are Ssangyong Motor’s suppliers.

The Industrial Fund Operation Deliberation Committee recently extended the loan handling period for the ‘Operating Fund Support Program for Key Industry Suppliers’ from early this month to the end of April, about three months, to continue financial support for small and medium-sized suppliers.

There is also speculation that Industrial Bank will expand support for Ssangyong Motor’s suppliers using the ‘Cheer Up Korea Special Operating Fund,’ which it operates separately from the Industrial Fund. This program supports suppliers in key industries including automotive, and the recent increase in the support limit from 1 trillion won to 1.5 trillion won has prepared room for additional support.

Choi Dae-hyun, Senior Vice President of Industrial Bank, also said in a recent briefing related to the Ssangyong Motor issue, "We cannot decide on financial support for Ssangyong Motor before the P-Plan without a sustainable business plan and management normalization plan," but regarding support for suppliers, he used the expression ‘make the most of it’ and mentioned the programs currently in operation.

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