Eximbank reinvents roles, functions

State bank CEO bolsters investment bankings; supports export of hallyu

By Kim Rahn

Export-Import Bank of Korea Chairman Kim Yong-hwan speaks during a recent interview at his office in Yeouido, southern Seoul. / Korea Times photo by Shim Hyun-chul

Over the past two years, the Export-Import Bank of Korea (Korea Eximbank) has gone through significant changes both in its roles and functions. It has expanded its investment banking service while stepping up efforts to support exports by the nation’s services industries.

The changes were initiated by Kim Yong-hwan, chairman of the Korea Eximbank, who strongly believes that the state-run lender should reinvent itself to adapt to the rapidly-changing global business environment.

He aims to expand investment banking to better support exporters. To that end, he says that he will make further efforts to create a global network of bankers with top-notch international staff. The executive is already making strides toward global partnerships, hosting its annual round table conference in Hong Kong with regional banking officials.

“Eximbank is the only institution to hold such a regular meeting with investment banks. It is important to form a global network with them for more cooperation in funding, M&A and project financing,” Kim said during an interview with The Korea Times on Feb. 21.

This is the third year the state-run lender has organized the conference. Kim, who took office two years ago, said the annual meeting is growing, with increased attendance and more collaboration happening at the conference.

Aside from working toward global partnerships, Kim wants to help the nation’s exporters and importers. The effort follows the changing environment surrounding overseas construction contracts. Bidders, who can finance the beginning stages of construction, compete for these large contracts.

“Beyond the simple role of providing loans, we hope to offer a systematic financing solution to Korean companies from the point they set plans for bidding, so that they can get more orders and increase their competitiveness against global competitors,” Kim said.

The competition for these projects is stiff. Kim says the nation would face competitive bids from other countries, not just other companies.

“China and Japan are eager to win biddings, and the governments there support companies’ financing by offering billions of dollars. So far, Korean firms have won the competition because they have higher technology, but they may be disadvantageous in terms of financing in the future,” said the CEO, adding such projects can bring growth and employment to the winning firms’ countries.

Eximbank’s financial advisory and investment banking services have already been recognized. It was recently named the best export credit agency of 2012 by Project Finance International, a magazine for project financing.

Yet another initiative Kim hopes to accomplish is the revision of the law governing the state-run lender.

“The law was established in 1969. The old clauses don’t meet new business environment and market systems; so it has had to undergo partial revisions whenever needed, being revised 18 times so far. For the Eximbank to fulfill various forms of financial services, an overall change of the law is required to give us more flexibility,” he said.

A related bill was presented at the National Assembly to increase the bank’s capital from the current 8 trillion won to 15 trillion won and to change the name to the Korea Bank for International Cooperation.

“The entire revision will allow the Eximbank to provide total financial services, having competitiveness against export credit agencies in advanced nations,” Kim said.

One of the bank’s roles is financing for Korean shipbuilders and shipping firms. However, President Park Geun-hye has already pledged to set up a state-run ship financing institution to provide loans to cash-strapped ship owners for buying more ships.

Kim worries the responsibilities of the Eximbank and new institution would overlap and suggests the government and the bank share duties to prevent inefficiency.

“Establishing such a state-run institution may be against the World Trade Organization rules that ban support of specific industry. The institution may have to take charge of credit guarantees for shipbuilders and the Eximbank take charge of funding for them,” he said.

As part of efforts to support exports in the service industry, the lender will provide loans and credit guarantees worth 1 trillion won by 2016 to companies that provide products and services related to “hallyu” or the Korean cultural wave, such as concerts, soap operas and Korean food.

Such a plan follows a report that an increase in cultural product exports by $100 leads to an increase in consumer product exports of $412.

“We’ll also provide financial support worth 1.3 trillion won by 2016 to medicine manufacturing and bio industries as well as information and communications technology businesses, so that they can be the nation’s new growth engines,” the CEO said.