Kim Byunghwan "Lowering Soundness Burden to Expand Corporate Finance Support"... Request for Foreign Currency Loan 'Maturity Adjustment' (Comprehensive)

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Kim Byunghwan Requests Banks to Actively Consider Flexible Adjustment of Foreign Currency Payment and Loan Maturities

Amid ongoing domestic and international uncertainties caused by President Yoon Suk-yeol's emergency martial law situation and impeachment political turmoil, along with a sustained high exchange rate trend, the Financial Services Commission (FSC) held an emergency review meeting with policy financial institutions and private companies. Following the postponement of the introduction of stress buffer capital, the FSC announced it will accelerate additional regulatory easing. Furthermore, new programs will be launched, including the full-scale supply of low-interest semiconductor loans at around 2% comparable to government bond rates through the Korea Development Bank, and the review of support measures for direct corporate bond issuance by high-quality mid-sized companies.

On the 17th, the FSC, chaired by Chairman Kim Byung-hwan, held a 'Corporate Finance Situation Review Meeting' at the Korea Federation of Banks in Myeong-dong, Seoul, to discuss the recent funding status of domestic companies and future response strategies. Attendees included experts from the Korea Development Bank, IBK Industrial Bank, Export-Import Bank of Korea, Korea Credit Guarantee Fund, and NICE Credit Rating. Private companies such as SK Hynix, Hanwha Solutions, Hanon Systems, Samki EV, Jigecha Bank, and Etiphos also participated.

Chairman Kim emphasized that although the corporate funding market has generally remained stable despite recent political situations, proactive measures are necessary due to concerns that companies’ financing conditions may become difficult amid domestic and international circumstances.

First, he conveyed the intention to support the expansion of corporate finance by alleviating banks’ soundness burdens through measures such as postponing the introduction of stress buffer capital and improving the criteria for risk-weighted asset application, and to promote swift legislation on key economic bills in cooperation with the National Assembly.

Chairman Kim explained, "We plan to faithfully fulfill the role of policy finance as a catalyst, actively reflecting the opinions of industrial ministries in next year’s policy finance supply plan to provide sufficient funding to priority sectors, and to expand investment support for innovative technologies and companies that are future growth engines." He also urged commercial banks, saying, "When establishing next year’s business plans, please play a role in stabilizing the real economy," and requested, "Please consider innovative funding support methods that shift from the 'household and real estate' sector to 'corporate and growth capital,' and from 'debt-centered' to 'investment-centered' approaches."

Chairman Kim particularly requested the attending banks to actively consider flexible adjustments to the maturity of corporate foreign currency settlements and foreign currency loans, taking into account recent concerns about volatility in the foreign exchange market. The rationale is that if the maturity of foreign currency settlements and loans is adjusted, companies will not need to secure foreign currency at the elevated year-end exchange rates, reducing corporate burdens and contributing to easing supply-demand pressures in the foreign exchange market and stabilizing exchange rates.

The experts attending the meeting forecasted that the macroeconomic environment, including exchange rates and interest rates, will remain unfavorable to companies for the time being due to factors such as the U.S. presidential election results and ongoing geopolitical conflicts. They suggested the need to monitor the financial conditions of financially vulnerable small and medium-sized enterprises (SMEs), as well as the refinancing and new issuance status of corporate bonds. Companies participating in the roundtable requested various financial supports, including expanded funding for advanced and strategic industries, increased issuance scale of primary collateralized bond obligations (P-CBOs), and relief from interest burdens.

Chairman Kim stated, "Next year, we will promote new corporate support programs such as the full-scale supply of low-interest semiconductor loans at around 2% government bond levels through the Korea Development Bank, review support measures for direct corporate bond issuance by high-quality mid-sized companies, expand regionally specialized venture platforms, and strengthen linkage with policy institutions."

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