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KOREA CREDIT GUARANTEE FUND

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					       KOREA CREDIT
0   GUARANTEE FUND
Contents

Ⅰ   SMEs in Korea

Ⅱ   Credit Guarantee Scheme in Korea

Ⅲ   An overview of KODIT

Ⅳ   Credit Guarantee System of KODIT

Ⅴ   Performances

Ⅵ   Intensive Rescue Plan in 2009
Ⅰ SMEs in Korea
I. SMEs in Korea
  1. The Scope of SMEs

   ▪ Criteria : 1) No. of Employees
                2) Capital
                3) Sales

                            No of
                            No.
        Industry                        Capital          Sales
                          Employees
      Manufacturing         < 300     Capital ≤ $8M
       Construction         < 300     Capital ≤ $3M

   Telecom & Multimedia     < 300                     Sales ≤ $30M

       Wholesales           < 200                     Sales ≤ $20M

       Real Estate          < 50                      Sales ≤ $ 5M
I. SMEs in Korea
  2. Korean SMEs by Industry                   [As of the end of Yr 2007]




                                                      Total No. of Enterprises
                Construction                                  2,974,185
                    3%       Wholesale
                              & Retail                 Total No. of Employees
                               28%
                                                              11,149,134
            Services             Manufacture
              57%                   11%




  [By No. of Enterprises]
I. SMEs in Korea
   3. Status of SMEs in Korea         [As of the end of Yr2007]




 ▪ No of                SME (99%)                 L    Total: 2,976,646
  enterprises                                          SME 2 974 185
                                                       SMEs: 2,974,185


                                                L             12,612,692
                                                       Total: 12 612 692
 ▪ No of               SME (88%)              (12%)
  employment                                           SMEs: 11,149,134


                                                       Total: 1 049billi
                                                       T t l 1,049billion USD
 ▪ GDP            SME (49%)         Large (51%)        SMEs: 514billion USD



 ▪ Exports                                             Total: 372billion USD
                SME (31%)       Large (69%)            SMEs: 115billion USD
I. SMEs in Korea

  4. SMEs Financing


 ▪ Disadvantageous Environment for SMEs
   Interest rate on SME Loans
  ◦I t    t t           L
                                            (Unit: %)




 ▪ Main Obstacles for SME Financing
  ◦ Insufficient Collateral
  ◦ High Risk of Default
  ◦ High Transaction Cost
       Public Financing System for SMEs is Required!
Ⅱ Credit Guarantee System in Korea
II. Credit Guarantee System in Korea

 1. History



         Enforced『Th C dit G
 ▪ 1961) E f                       t Reserve F d S t 』
                d『The Credit Guarantee R
                 『                           Fund System』

 ▪ 1967) Enacted『The SMEs Credit Guarantee Act 』
                『

 ▪ 1976) Founded Korea Credit Guarantee Fund (KODIT)

 ▪ 1989) Founded Korea Credit Technology Guarantee Fund (KOTEC)

         Enacted『
 ▪ 1999) Enacted『The Regional Credit Guarantee Foundation Act』
                                                             』

 ▪ 2000) Established Korean Fed. of Credit Guarantee Foundation


                                                                  -8-
II. Credit Guarantee System in Korea

 2. Credit Guarantee Institutions

                  Target         Source of             Supervisory
   Institution
                 Business        Funding               Organization

                            ①Central Government         Financial
     KODIT
                 General    ②Banks                      Services
    (1976~)
                            [(0 225%±α)× SME L
                            [(0.225%         Loans]
                                                  ]    Commission

                  Tech-     ①Central Government         Financial
    KOTEC
                 Oriented   ②Banks                      Services
    (1989~)
                 Venture    [(0.135%±α)× SME Loans]    Commission

                            ①G
                            ①Government t
   16 CGFs        Small&    ②Local Government         Small & Medium
    (1999~)        Micro    ③Banks                    Business Admin.
                            [(0.02%±α)× SME Loans]

                                                                        -9-
II. Credit Guarantee System in Korea
  3. Outstanding Credit Guarantee
     KODIT                                                     KODIT
 Outstanding CG                                                Percentage to GDP
     (Unit: Trillion KRW)




                                                   Total
                            KODIT
                            KODIT
                             KOTEC        KOTEC
                                      CG/GDP
                                                   KODIT
                                                            16CGFs
                                                   KOTEC
 Whole CG/GDP               16 CGFs               16 CGFs
Ⅲ An overview of KODIT
III. About KODIT
   1. Profile



           Non-
 ▪ Status: Non-profit Special Legal Entity backed by Government
 ▪ Establishment : 1976
 ▪ Capital Fund : USD 4 billion (‘09)
 ▪ Outstanding Guarantee : USD 40 billion (‘09)
 ▪ No. of Employees : 2,200
 ▪ Biz Network : 1 Head office
                 8 Regional HQs, 99 Branches
III. About KODIT
  2. Governance


 Financial Services   Ministry of Strategy   Small & Medium
    C      i i
    Commission               Fi
                          & Finance          Bi Ad i i t ti
                                             Biz Administration
     Operation                                    Capital
                        Budget Planning
    Supervision                                 Contribution



                       Board of Policy



                      Chairman & CEO


                                                                  - 13 -
III. About KODIT
  3. Contribution to KODIT
                                        Unit : million USD




                                                      1,440




         388                                          1,584
                262       457   590   664
         443                                79
                255 457   255   111




                                                              - 14 -
III. About KODIT
    4. Business Line




     Infrastructure
         Credit                                        Consulting
       Guarantee
                          Credit     Credit
                         Guarantee Insurance
                                                                     Integrate
Credit Guarantee                                                     Management
       p g
for helping                                                          Consulting
Private Investment Co.                                               for SMEs
to invest on SOC
                         Credit Guarantee   Credit Insurance
                         for Liability of
                                     y      for SME’s Trade Receivables
                         promising SMEs
                         to Banks
Ⅳ Credit Guarantee System of KODIT
Ⅳ. Credit Guarantee System of KODIT
 1. Basic Framework




                                   Gov.
                     Contribution         Supervision



             Application                    Credit Guarantee
                 1                                  3
                 2
    SMEs                          KODIT           Capital      Banks
            Credit Review
                                                Contribution
                                                C t ib ti
                           Loan     4
Ⅳ. Credit Guarantee System of KODIT
 2. Type of Credit Guarantee



 ▪ Guarantee for Bank Loans
 ▪ Commercial Bills Guarantee
 ▪ Guarantee for Bidding, Contract, etc.
 ▪ Guarantee for Payment Guarantees of Banks
 ▪ Tax Payment Guarantee
 ▪ P-CBO Guarantee
 ▪ Others
Ⅳ. Credit Guarantee System of KODIT
 [Ref.] P-CBO Guarantee

 ▪ Primary Collateralized Bond Obligation
Ⅳ. Credit Guarantee System of KODIT
 [Ref.] P-CBO Guarantee


                  - First introduced in July 2000
 ▪ Hi t
   History          In 2008,                   d       P-CBO
                  - I 2008 KODIT resumed new P CBO guarantees   t
                    to alleviate the financial straits of SMEs.


                    • Outstanding Guarantee      2,630M. USD
 ▪ Performances     • Capital Fund                640M.
                                                  640M USD
                    • Leverage Ratio                 4.1 times
 (as of Dec.
  2009)             • Enterprises Guaranteed            1 260
                                                        1,260
                    • Supply Goal in 2010        1,700M. USD
Ⅳ. Credit Guarantee System of KODIT
 3. Credit Rating System (CCRS)

                            Quantitative Qualitative      Credit Rating
 Cash flow       F/S
                              Factor      Factor

                                                           KS1 ~ KS3
                        Industry Grade                     KA1 ~ KA4

             Quant. score                   Qual. score    KB1 ~ KB4

                                                           KC1 ~ KC4
                              Total Score
                                                           KD1 ~ KD3
                               Pre-Grade                   KE1 ~ KE3
             Override
                              Final Grade
Ⅳ. Credit Guarantee System of KODIT
 4. Credit Line & Coverage Ratio


  ▪ Credit Line
    √ Normal Ceiling for a Single Enterprise: KRW 3 billion
    √ Special Ceiling for a Single Enterprise: KRW 7 billion
      (Only Applied when necessary for national economy)

          g
  ▪ Coverage Ratio
      Rating     KS1    KS2~KS3   KA1~KA4   KB1~KB3   KB4~KE3
    Percentage   50%      70%       75%       80%      85%


   √ Long term Users (over 10yrs) : -5%
          Policy-
   √ Gov. Policy-related Guarantee : 100%

                                                                - 22 -
Ⅴ Performance
 Ⅴ. Performance
        1. Credit Guarantee

   Unit : million USD                                                         Unit : times

                                                                              38,936



                                          10.4                                         12
                                    9.2          9.8
                        9.0   9.1                                     8.5              10
                                                       7.9     8.0            7.8
             7.8                                                                       8
                                                                                       6
                                                                                       4
                                                                                       2
                                                                                       0


                                                             Leverage ratio
※ Including P-CBO
Ⅴ. Performance
       2. Credit Insurance

Unit : million USD                                         Unit : times
                                                    10.8
                                                                  12
                                             11.5     4,527
                                                                  10

                     7.1               6.7                         8

                           4.8   5.2                               6

              2.8                                                  4

                                                                   2

                                                                   0
Ⅴ. Performance

   3. Infrastructure Credit Guarantee

Unit : million USD                                      Unit : times
                                                         4 145
                                                         4,145

                                         12.8   13.6             14
                                  12.4

                           10.2
                                                       11.6      12
                     9.7                                         10
             7.9                                                  8
                                                                  6
                                                                  4
                                                                  2
                                                                  0
Ⅴ. Performance

  4. Significant Role on Korean Economy

      The Growth Rate of GDP                 The Growth Rate of CG




                        The growth Rate   The Growth
                        of GDP            Rate of CG supplied
Ⅴ. Performance

  4. Significant Role on Korean Economy


  ▪ Credit Guarantee-Effect on Korean Economy
    √ As of the Yr 2008, CG Supplied: 24.7Billion US$

        Effect on National Economy      Numerical Value

    1   Effect on Production            890 Million USD

    2   Effect on Value Added           420 Million USD

    3   Eff t on Employment
        Effect   E l      t                 K. Persons
                                         23 K P
Ⅵ Intensive Rescue Plan in 2009
Ⅵ. Intensive Rescue Plan

     1. Liquidity Trap



                                                                      Gov t Funds
                                                                      Gov’t-Funds Target rate(%)
 Unit : billion USD                                                   SME loan balance extended
                                                                      in local currency
 360 0
 360.0                                                                                  6.00%
                                                                                        6 00%
                                                              350.2     350.9   350.2
            5.00%                             345.7   347.4
 350.0                                342.7
                      337.9   340.3                                                     5.00%
 340.0
 330 0
 330.0
                                                                                        4.00%
 320.0                3.00%
 310.0                        2.50%                                                     3.00%
 300.0
 300 0       296.0                    2.00%   2.00%
                                              2 00%   2.00%   2.00%    2.00%    2.00%
                                                                                2 00%
                                                                                        2.00%
 290.0
 280.0
                                                                                        1.00%
 270.0
 270 0
 260.0                                                                                  0.00%
              07       08     09. 1   09. 2   09. 3   09. 4   09. 5     09. 6   09. 7
Ⅵ. Intensive Rescue Plan

  2. Capital Injection
                               Unit : million USD

       Enterprise
       government                 27
       banks


                                1,584




          104            74     1,440

          555            624


         ‘07
          07              08
                         ‘08     09
                                ‘09
Ⅵ. Intensive Rescue Plan

       3. Blanket Support to help SME financing


        Balance of credit guarantee over years                                  Unit : billion USD

50.0                                                                                          37.0


40.0


30.0                                                     26.9
                                    25.0   25.6   24.9          24.9                 25.4
                                                                       23.7   23.1

20.0           17.2          18.1
                      15.7

         9.0
10.0
10 0


  -
        '97    '98    '99    '00    '01    '02    '03    '04    '05    '06    '07     '08      '09
Ⅵ. Intensive Rescue Plan

  4. System Reform


       As-
       As-was              As-
                           As-is
 Thank You
     Yong-Ju, Chin
International Affairs Team
          www.kodit.co.kr
Website : www kodit co kr
 E-mail: intl@kodit.co.kr

				
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