Helping Hand for SMEs in Trouble

Shinhan Bank to provide 100 bln won to facilitate KCGF to issue 1.2 tln won worth credit guarantees

Shinhan Bank signed an agreement on Dec. 3 to provide a special fund to the Korea Credit Guarantee Fund to help SMEs in financial trouble to the tune of 100 billion won by the end of 2009, the bank said recently.
Shinhan Bank's move is the first one by a bank in Korea and KCGF will be able to provide 1.2 trillion won worth of credit guarantees to small and medium-size companies that need financial assistance.
Under the agreement, KCGF will extend credit guarantees to SMEs on recommendation by Shinhan for the maximum of five years in duration and up to 3 billion won worth of guarantees. The agreement went into effect as of Dec. 8.
KCGF will provide a 100 percent guarantee at a lower guarantee fee, down 0.2 percentage points from the usual fee. Shinhan will cut the interest rates on loans provided to SMEs by 0.5 percentage points. Shinhan's branch managers have been given the authority to approve such loans regardless of the amount of existing loans. The bank will also hold any of its staff responsible for mistakes they make in handling such loans if they are found to be intentional.
President Shin said the bank made the fund available despite the current pressure on its funds. He expects the bank's image and trust are likely to be improved in the short and medium terms, along with other positive factors because of its effort to help out those firms in difficult times.
President Ahn Taik-soo said the agreement represents a new model of mutual survival for banks, credit guarantors and SMEs and KCGF will do everything possible to make the new financial facility a great success.
The bank has decided to sign the agreement in order to help SMEs that lack collateral to get bank loans, although they have the ability to pay back the loans. Under the facility, they will be able to get credit guarantees issued by KCGF at a concessional interest rates.
Shinhan also has decided to suspend loan repayments due from SMEs for the first half of next year, which will amount to 1.2 trillion won. Shinhan will also set up a headquarters to be in charge of construction and shipbuilding firms that will be under special financial control before the year is out.
The tentative name of the unit is the Corporate Structure Renovation Headquarters, which will be staffed by 30 expert credit analysts and industrial experts. These experts will provide liquidity, investment counseling, and consultancy to businesses in financial distresses and those that want to expand their operations.
Shinhan Bank officials said the deal with KCGF emerged while they were looking for ways to provide assistance to SMEs in financial trouble.
Shinhan Bank's vision is to provide optimal value to its customers, being trusted by the stockholders, giving respectable working space to its employees and completing its mission to society and the country as a corporate citizen. Shinhan will strive to be a top bank in the country that the people will be proud of, realizing the upgraded administrative culture and leading not only in the domestic market, but the financial circle in Asia.
The bank's No.1 vision is to be a bank that strives for the ideal to become the pride of every party concerned including customers, the Shinhan family, Koreans, Korea and Asia. The second vision is to be a bank that leads the field of banking in Asia and reminds people of 'the best bank' in Korea.
The bank's mission is made of four parts including one for customers, shareholders, employees and society. Shinhan will be a bank that provides the best value as a lifetime partner to its customers; the bank will strive to win unconditional trust in society; the bank will provide a work environment respected by our sons and daughters; Shinhan will be a corporate citizen that contributes to the national economy and society through earnest work and taking a leading role for the development of industry. nw

Shinhan Bank President Shin Sang-hoon, 3rd left shakes hands with President Ahn Taik-soo of Korea Credit Guarantee Fund after signing an MOU to set up a special fund to help SMEs in financial difficulties Dec. 3.