In a bid to support the expansion of South Korean firms into the Latin American region, the Export-Import Bank of Korea signed a series of deals with leading regional development banks in Central and South America.
Korea Eximbank and the Central American Bank for Economic Integration signed Saturday an on-lending interbank credit facility agreement with a ceiling of $100 million, officials said Sunday.
Founded in 1960, CABEI is a representative multilateral financial institution which has invested $13.3 billion in development projects in the Central American region over the past 10 years.
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| Lee Duk-hoon (right), president of state-run Export-Import Bank of Korea, poses after signing a $100 million credit facility agreement with Nick Rischbieth, executive president of the Central American Bank for Economic Integration on Saturday. (Korea Eximbank) |
Under the interbank deal, Korean companies that have to deal with local partners in Central America can make direct transactions through local banks within the limit set by Korea Eximbank.
In short, the corresponding local bank would take credit loans from Korea Eximbank and then relend the money to the requested local company, under Korea Eximbank’s financial guarantee.
“Small-sized exporters are often discouraged on the verge of a major deal in developing countries as the contractor tends to demand a certificate of payment or full-scale financing,” said an official of the state-run bank.
This credit facility system will not only help Korean exporters and their local partners, but also expand the overseas network of Korea Eximbank, which does not have official operating offices in the Latin American region, the official added.
Korea’s trade balance with CABEI’s member states as of the end of 2013 was $570 million, up from $453 million in 2011, according to the bank.
Also, the Korean bank had earlier signed a confirming guarantee agreement with the Inter-American Development Bank, in an aim to further expand the credit facility system in Central America.
By using the IDB’s confirming guarantee, Korea Eximbank will be able to sign credit deals with local banks, officials explained.
“Korean companies find it difficult to enter the Central and South American market as the region comprises many different financial conditions,” said Korea Eximbank president Lee Duk-hoon, upon signing the deal.
“With our partnership with IDB, we will be able to offer financial support in any Latin American country.”
By Bae Hyun-jung (tellme@heraldcorp.com)
