Project Financing Insurance
Korea Development Bank (KDB) will expand its overseas business guaranteed by the Korea Trade Insurance Corporation (K-Sure).
The consultative group for Korean financing policies, consisting of the Ministry of Strategy and Finance and the Financial Services Commission, has created this policy so that KDB can raise foreign project financing (PF) with K-Sure guarantee.
During the 2nd half of last year, the Korean financial authorities integrated domestic financial policies to KDB, and overseas ones to the Export-Import Bank of Korea (Korea Eximbank), as a plan of “Financial Policies Restructure.”
At that time, it was agreed that KDB should invest overseas without a guarantee from domestic organizations. Only in the case of investing in high-risk countries, Korea Finance Corporation (KoFC) could cooperate.
However, Korea Eximbank and KDB have recently been in conflicts on this matter.
Korea Eximbank claims that KDB should take their own risk of overseas investment, and KDB insisted that they need guarantee from domestic organizations.
According to Financial Services Commission and other industry professionals on June 19, KoFC concluded this problem.
An official in Financial Services Commission said that it has been agreed to reduce KDB’s risk when domestic companies raise PF from KDB to support other parts of businesses. He also said that K-Sure will guarantee KDB’s high-risk projects.
Risk evaluation criteria will be the ones used in OECD. An official in Financial Services Commission pointed out that OECD criteria could be accepted by both KDB and Korea Eximbank.
This agreement temporarily ceased the disputes among financial institutions. A personnel in domestic construction industry mentioned that it is eventually very helpful for domestic companies to receive financial support from various organizations even if financial institutions fight over their own interests.