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Intensive Rescue Plan for SMEs by renata.vivien

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									Credit Guarantee Management
     Under Economic Crisis
and Measures to Boost Economy




       The 19th ACSIC Training Program
              Bangkok, Thailand
           9th – 14th, August 2009



                                         1
Contents


1. SMEs’ difficulties in Financial Crisis


2. Strategy to support SMEs


3. Intensive Rescue Plan for SMEs


4. KODIT’s Contribution


                                            2
       1. SMEs’ difficulties in Financial Crisis

                 Sluggish
                                      Decline of
                  World
                                       Exports
                 Economy
 Global                                               Real
Financial       Restriction                         Economy
                To borrow
  Crisis                                           Contraction
                In foreign
                                      Credit
                 currency
                                      Crunch
                  Volatile
                 Financial
                  Market



                                                   Domestic
                              Decreased
                                                   Economy
                               Liquidity
                                                   Downturn

                                                           3
      1. SMEs’ difficulties in Financial Crisis

                                 Drop of Domestic
    Decline of Exports
                                   Consumption

                             Decrease in Construction
Rise of Raw Material Price
                                    investment

  Rise of Foreign Currency    Strong Knock-on Effect in
     Financial Expenses        Construction Industry




          Export                   Construction
          SMEs’                       SMEs’
        Difficulties                Difficulties
                                                          4
     2. Strategy to Support SMEs



Support SMEs suffering from Liquidity Shortage




          Credit Guarantee Expansion



  Revision of      New Guarantee     Special
Guarantee System     Programs      Contributions



                                                   5
          3. Intensive Rescue Plan for SMEs

                3-1. Expanding Credit Guarantee


• Outstanding Credit Guarantee
  had been decreasing since 2004

• We began to expand Credit Guarantee
  from June, 2008


            2009 plan

New Guarantee         Outstanding
   Provision        Credit Guarantee
  : KRW 25.2           : KRW 46.6
    trillion             trillion
                                                  6
          3. Intensive Rescue Plan for SMEs

       3-2. Revision of Credit Guarantee System


    Higher Ceiling    Maximum guarantee amount go up to 10(from 7)
1                      in General Guarantee, 1,000(from 500) in P-CBO
       Amount
                       Guarantee (※unit : billion of KRW)

        Wider
                      It was ranged 50%~85% depending on Credit Rating
2   Coverage Ratio     → 95% to 100% (startup, contributed guarantees)


       Prompt
                      ARS [Automatic Rating System] is introduced
3     Guarantee
       Support        2 Class : under KRW 50 million, under 100 million


                                                                           7
         3. Intensive Rescue Plan for SMEs

     3-2. Revision of Credit Guarantee System


    Rollover of
                      Annual percentage payback obligation of guaranteed
4     Existing
                       loans will be suspended till the end of 2009
    Guarantees




    Expanding an
                       Guarantee for SMEs in the construction sector
5   Eligibility of
    Guarantee for
                        as the demand for execution of contracts
                       Private companies are now eligible
    Performance




                                                                            8
      3. Intensive Rescue Plan for SMEs

       3-3. New Credit Guarantee Product


Special Guarantee for SMEs    Guarantee for Bridge Loans
 under Fast-Track Program     of Construction Companies


 Guarantee with Collateral
                                  P-CBO Guarantees
   for Micro Companies


  Guarantee for Young          Special Contribution and
Entrepreneurs for Startups   Agreement Guarantee Program

                                                           9
         3. Intensive Rescue Plan for SMEs

Fast-Track Program


• In cooperation with Banks, KODIT provides guarantee
  through faster support scheme

• Eligible SMEs
  - companies damaged by foreign currency option (KIKO)
  - companies that have liquidity problems




                                                          10
            3. Intensive Rescue Plan for SMEs

• Procedure




• Performance
• SMEs hit by foreign currency-option losses such as KIKO : KRW 29 billion
• SMEs suffering from loquidity shortages : KRW 500 billion
• Target Amount for 2009 : KRW 500 billion in total

                                                                       11
          3. Intensive Rescue Plan for SMEs

Guarantee for Bridge Loans of Construction Companies


• Help a Construction company borrow bank loans to
  carry out a construction project

• Guarantees are provided for loans secured with the right to
  receive money from the owner of the project




                                                                12
            3. Intensive Rescue Plan for SMEs

• Procedure




• Performance
•   KRW 107 billion in 2008, KRW 342 billion in 2009(as of the end of June,
    2009)
•   Target Amount for 2009 : KRW 2 trillion
                                                                              13
          3. Intensive Rescue Plan for SMEs

 Guarantee with Collateral for Small Company

• Purpose : To ease for bank to roll over existing loan and provide
            new loan to small company by taking the price down
            risk of collateral

• Eligible company : Manufacturing, Construction,
                     Mining, Transportation business
                     which employ under 10 employees
• Proportion of Guarantee : 100%

• Ceiling of Credit Line : KRW 7 billion

• Credit Line : Collateral value of real estate
                                                                  14
          3. Intensive Rescue Plan for SMEs

 P-CBO Guarantees


• Reinforcing the credit of individual company that can not access
  to the Bond market because of Credit gap and Size gap




                                                                 15
          3. Intensive Rescue Plan for SMEs

• Procedure




• Performance : Target Amount for 2009 is KRW 3.2 trillion
                                                             16
          3. Intensive Rescue Plan for SMEs

Guarantee for Young Entrepreneurs for Startups

• KODIT contributes to job creation by encouraging young people
  lacking capital to establish startup businesses
• Under a special agreement between KODIT and 4 banks, young
  entrepreneurs would get the lowest interest rate for loans
• All banks are eligible to use this guarantee program




                                                             17
          3. Intensive Rescue Plan for SMEs

Guarantee funded by Special Contribution
from Commercial Banks

• Commercial banks make special contributions to KODIT in
  installments until the end of 2009 depending on the performance
• KODIT guarantees loans up to 12 times the each bank’s
  contribution




                                                               18
          3. Intensive Rescue Plan for SMEs

Guarantee funded by Special Contribution
from Large Enterprises(LEs) and Banks


• Support subcontractors of LEs with the funds contributed
  equally by LEs and Banks (LEs : Hyundai motor company, Posco,
  Hynix)




                                                            19
          4. KODIT’s Contribution

                       4-1. Key Performance


                        Annual Plan     Performance
                                                         B/A
                           (A)           (1st Half, B)

         Higher
           New                14.9             11.4
1   Ceiling Amount
    Credit Guarantee   (Trillion KRW)   (Trillion KRW)
                                                         76.5%



      Outstanding             46.6             43.1
2   Credit Guarantee   (Trillion KRW)   (Trillion KRW)
                                                         92.5%


                                                                 20
            4. KODIT’s Contribution

                 4-2. KODIT’s Contribution


                 Guarantee for      Bank Loan      Portion
                 Bank Loan(A)      for SMEs(B)      (A/B)

   Higher               31.9            422.4
  Dec.2008                                          7.6%
Ceiling Amount   (Trillion KRW)   (Trillion KRW)


                  7.2 Tr. KRW      16.2 Tr. KRW     1.3%p


                        39.1            438.6
  Jun.2009                                          8.9%
                 (Trillion KRW)   (Trillion KRW)

                                                             21
Thank you

    • Ahn, Jung Yol
     jyahn@kodit.co.kr
    • Byun, Ja Yeon
     jayeon@kodit.co.kr

                      22

								
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