Shinhan-led banks grant loan to Afreximbank

Seo Seung-hyeon, third from left, general manager of Shinhan Bank London branch, and Denys Denya, executive vice president of African Export-Import Bank (Afreximbank), third from right, show their syndicated loan contract at The Ned Hotel in London, Sept. 14. Under the deal, Shinhan and other local banks agreed to extend a $150 million syndicated loan to Afreximbank. Courtesy of Shinhan Bank

By Park Hyong-ki

Shinhan Bank and other local banks have issued a syndicated loan worth $150 million to Egypt-based African Export-Import Bank (Afreximbank) to help boost the region's trade financing, according to the bank, Sunday.

KEB Hana Bank, NongHyup Bank and Woori Bank participated in the consortium led by Shinhan to facilitate the loan for Afreximbank.

This marks the bank consortium's first syndicated loan to the pan-African multilateral financial institution, it said.

The loan's maturity is three years with an annual interest rate of 1.35 percent plus the average interbank LIBOR rate, the bank noted.

It added the Korean government supported the Shinhan-led group to provide the syndicated loan.

“The deal was a result of a group effort by the Financial Supervisory Service, the Bank of Korea and the Korean Embassy in London,” a Shinhan official said.

“Shinhan will continue to seek opportunities overseas and diversify its revenue sources by making inroads into new markets.”

The $150 million syndicated loan will help support Afreximbank to provide a line of credit and guarantees for African companies seeking to export and import goods and services.

The African multilateral policy bank was established in 1997 after registering with the United Nations to financially back 47 of its member countries in boosting their trade financing.

Shinhan Bank said the loan to Afreximbank follows its recent deal to provide project financing to the development of an offshore wind power in the United Kingdom, and real estate financing in the region.

It also extended loans to a U.K.-based company to finance its acquisition of an asset. Shinhan did not disclose those projects and the name of the local company as it was not obligated to file the disclosure given it is an unlisted company.

The bank has been boosting its nonbank business portfolio through its diversification strategy, in line with Shinhan Financial Group's expansion of its global investment banking operations, it noted in a press release.

The group has consolidated three investment banking divisions of Shinhan Bank, Shinhan Investment and Shinhan Life Insurance.

Shinhan is the second biggest bank here in terms of the volume of deposits and loans, following KB Kookmin Bank, according to the bank's semiannual audit filing.

The bank said it has also joined the European Bank for Reconstruction and Development's (EBRD) framework called the trade facilitation program at the same day it signed a deal to provide the syndicated loan to Afreximbank last Friday.

“The program will allow Shinhan Bank to guarantee the payment of letters of credit and other trade finance instruments which have been issued by the EBRD's partner banks to exporters of Korean products,” the EBRD said in a press statement.

The program was developed in 1999 to promote and facilitate international trade to, from and within central Europe and the Baltic states, Eastern Europe and the Caucasus, south-eastern Europe and the southern and eastern Mediterranean region.?

Korea is one of the founding members of the EBRD and a donor. The program has supported 360 export and import transactions for Korean companies. The EBRD has financed more than 22,500 foreign trade transactions worth more than 16.5 billion euro, according to the EBRD.