POSCO, KB Kookmin Bank make banking easier for partner firms

POSCO President Lee Hee-keun, left, and KB Kookmin Bank CEO Lee Hwan-ju pose after signing a memorandum of understanding for a new supply chain finance service, at POSCO's office in Seoul, Thursday. Courtesy of POSCO

Steelmaker POSCO has forged a partnership with KB Kookmin Bank to introduce a supply chain finance service for its partner firms, helping improve cash flow for suppliers amid a prolonged downturn in the steel industry.

POSCO President Lee Hee-keun and KB CEO Lee Hwan-ju signed a memorandum of understanding (MOU) on Thursday at the steelmaker's office in Seoul.

The new service is a financial system that connects financial institutions with companies participating in a supply chain from production to distribution to increase liquidity throughout the supply chain. It is designed as a win-win model that helps the cash flow of client companies that face difficulties in preparing funds due to delays in payments or a lack of collateral.

Under the MOU, POSCO, its client companies and KB will be linked in a structure where the bank takes full charge of collecting sales payments and provides clients with both financial and nonfinancial services, including corporate loan support and environmental, social and governance consulting.

The two companies will begin developing a system that integrates KB’s loan program into POSCO’s My POSCO online platform, aiming for its official launch within the year. Once the development is complete, clients will be able to handle everything from loan application to executing it in a one-stop process within the platform.

Clients will also receive preferential interest rates at the lowest level in the industry with minimized spread rates, allowing them to secure substantial liquidity and reduce financial costs amid a prolonged recession in the steel industry.

KB participated in the agreement to establish a leading financial model that supports mutually beneficial cooperation across the entire steel industry supply chain, and to create business synergy through cross-selling services such as deposits and foreign exchange.

"This agreement goes beyond a simple financial cooperation,” Lee said. “It is a major milestone that elevates POSCO's unique 'win-win cooperation model' of growing together with our clients to the next level. We hope this collaboration will be recorded as the most exemplary and representative model of win-win cooperation, forged by the handshake of Korea's manufacturing and financial industries."