Financial Cooperation
In order to support the expansion of local firms into the Latin American region, the Export-Import Bank of Korea (Korea Eximbank) and the Central American Bank for Economic Integration (CABEI) signed an on-lending interbank credit facility agreement with a ceiling of US$100 million (110.68 billion won). Under the re-lending deal, Korea Eximbank signs a credit line contract with the local bank in the region. The corresponding local bank will take credit loans on favorable terms from Korea Eximbank, and then re-lend the money to the requested local company, which has business relations with domestic companies.
Via this method, smooth financial support is expected when Korean companies enter the market of the member countries of the CABEI region in the future.
In particular, it is now possible to provide re-lending finances even to the countries of the CABEI area in which it is difficult for Korea Eximbank to directly set a limit, since they have a small trade scale or a weak credit rating of the local bank.
Meanwhile, the CABEI is the largest multilateral development bank in Latin America, consisting of five member nations within the area, including Guatemala, El Salvador, Honduras, and Nicaragua, and seven member nations out of the area, including Spain and Taiwan.
Over the past 10 years the bank played a vital role in economic development in Central America, providing a total of US$13.3 billion (14.72 trillion won) to development projects in the area.
An official from Korea Eximbank said, “The Central American region, which is under the control of CABEI, is a trade surplus market for Korea and the bridgehead connecting the markets of South and North America. It is also the area in which Korean companies should enter strategically.”