National Policy Banks Launch Emergency Management Amid Economic Complex Crisis

[Asia Economy Reporter Song Hwajeong] The national policy banks have entered an emergency management system amid a complex economic crisis and have taken preemptive measures.

According to the Export-Import Bank on the 29th, Yoon Heesung, the new president, chaired the 'Emergency Economic Crisis Response Task Force (TF)' meeting for the first time the day before.

At the meeting, the Export-Import Bank's credit support measures to overcome the recent complex economic crisis, including high inflation, high interest rates, and high exchange rates, were discussed in depth. The bank reported that recent supply chain instability is leading to high inflation and decided to significantly expand support for global supply chain responses from the existing 15 trillion won to 20 trillion won. The additional 5 trillion won will be used for financial support necessary for securing raw materials and for small and medium-sized enterprises (SMEs) and mid-sized companies struggling due to supply chain disruptions. Considering the increased financial difficulties of SMEs due to the rise in base interest rates and spread expansion, the loan ratio for SMEs and mid-sized companies will be maintained at over 50%.

In addition, to respond to the contraction of foreign currency liquidity caused by the rise in exchange rates, the Export-Import Bank plans to raise foreign currency funds amounting to 20 billion dollars by the end of this year. This is an increase of more than 5 billion dollars compared to the foreign currency funds raised last year.

President Yoon said, "High inflation, high interest rates, and high exchange rates caused by global supply chain disruptions pose a significant threat to our economy, which is highly dependent on external factors," and emphasized, "To overcome the crisis, the Export-Import Bank will actively support government policies by providing swift and bold financial support to vulnerable sectors such as supply chains and SMEs."

Korea Development Bank

Similarly, the Korea Development Bank (KDB) has also entered an emergency management system to respond to the complex crisis. KDB President Kang Seokhoon recently declared the establishment of the 'KDB Emergency Economic Response System' at the second half management strategy workshop. This was based on the judgment that a system capable of preemptive response before an economic crisis occurs is necessary. President Kang diagnosed, "Our economy is facing a complex crisis due to the rise of economic nationalism, global supply chain disruptions caused by profit bloc formation, intensifying economic instability factors such as high inflation, high interest rates, and high exchange rates, and the resurgence of COVID-19. During the interest rate hike period, risks of liquidity crunch are increasing in both financial and real economies due to sharp declines in asset markets, cliff effects from the end of COVID-19 maturity extensions and repayment deferrals, and contraction in startup and venture investments." KDB plans to operate an in-house emergency management committee to closely monitor funding procurement and supply situations as well as the business normalization status of troubled companies, ensuring thorough bank profit and risk management.

The reason national policy banks have preemptively entered emergency management systems is that they need to provide policy support, such as assisting companies at risk during future crises. Earlier, President Yoon stated in his inaugural speech, "The Export-Import Bank, a reliable partner of our economy, must find breakthroughs to overcome the economic crisis and provide preemptive and active financial support."

In fact, the Industrial Bank of Korea (IBK), which has introduced support measures for SMEs and small business owners, has proactively secured funds. IBK plans to support a total of 26 trillion won in customized low-interest new loans over two years to provide liquidity supply, competitiveness enhancement, and recovery support to self-employed and small business owners who are relatively vulnerable to changes in the financial environment. Prior to this, IBK decided at its board meeting on the 12th to issue 600 billion won worth of amortizing contingent convertible bonds.

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