Financial Services Commission Provides Emergency Financial Support of 2 Trillion Won to Ukrainian Affected Companies

[Asia Economy Reporter Song Hwajeong] A policy finance support worth 2 trillion won will be provided to companies affected by Russia's invasion of Ukraine, and loan maturities will be extended.

According to the Financial Services Commission on the 4th, the detailed implementation plan for the emergency financial support program was finalized at the joint emergency response task force (TF) meeting on the Ukraine situation held by related ministries on the same day. Previously, the government announced on the 25th of last month that it would prepare and implement an emergency financial support program worth 2 trillion won in case Korean companies suffer damages related to the Ukraine situation.

Under the emergency financial support program, 2 trillion won in policy finance will be provided to quickly resolve funding difficulties of affected companies, and the maturity of existing loans will be extended.

First, through the self-capacity of national policy banks such as Korea Development Bank, Industrial Bank of Korea, and Export-Import Bank of Korea, 2 trillion won in special loans for new operating funds will be supplied to affected companies. The Korea Development Bank will provide 800 billion won, the Industrial Bank of Korea 700 billion won, and the Export-Import Bank of Korea 500 billion won respectively. The support targets include ▲ domestic companies that have entered conflict areas such as Ukraine and Russia by establishing local corporations or branches, or factories ▲ companies that have export or delivery records to conflict areas within the past year (since January 1 of last year) or companies scheduled to export or deliver in the future, with submission of transaction proof documents ▲ companies that have import or purchase records from conflict areas since January of last year or companies scheduled to import or purchase in the future, with submission of transaction proof documents ▲ related cooperative and supplier companies, and companies located in the upstream and downstream of the value chain are broadly included. In particular, support will be focused on medium-sized and small enterprises that may experience relatively significant funding difficulties.

These companies will receive funds under preferential conditions such as reduced loan interest rates (40~100 basis points) and relaxed approval authority. The Korea Development Bank and Industrial Bank of Korea will operate a 'separate limit' within existing special loan programs, and the Export-Import Bank of Korea will establish a dedicated program to provide support.

Along with this, special repayment deferrals such as maturity extensions will also be implemented. Loans and guarantees from policy financial institutions including Korea Development Bank, Industrial Bank of Korea, Export-Import Bank of Korea, and Korea Credit Guarantee Fund will have their maturities extended in full for one year. However, companies that have been considered non-performing before the Ukraine situation and are difficult to support with credit will, in principle, be excluded from maturity extensions, and each institution will decide on maturity extension after individual review. The Financial Services Commission plans to encourage voluntary extensions for loans from commercial banks.

The emergency financial support program will be implemented from today. Applications can be made through the Korea Development Bank, Export-Import Bank of Korea, and Industrial Bank of Korea. Each policy financial institution will also operate a 'Ukraine Situation Affected Companies Consultation Center.'

A Financial Services Commission official said, "It is necessary to prepare for the possibility of ripple effects on the overall Korean economy due to raw material price fluctuations and expanded supply chain risks caused by the prolonged Ukraine situation," adding, "Since the Ukraine situation is developing urgently, we will actively review expanding the scale and targets of support while checking the damage status by industry and sector, as well as the degree and scope of ripple effects."

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