WASHINGTON, D.C., May 12, 1999 –
In response to the needs of Korean companies and banks that cannot access trade finance, the International Finance Corporation will increase the US$100 million trade enhancement facility which it established with Bank of America last December by another $50 million. The facility guarantees 40 percent of Bank of America's exposure to eligible Korean banks for trade finance transactions. The total amount of the facility will increase to $150 million and IFC's guarantee will increase to $60 million.
The increase in the facility amount of the KTEF-BOA will promote Korean trade by making more short-term trade finance available. It will give selected Korean banks better access to letters of credit confirmations and bankers acceptances; support trade between Korea and other markets; and increase the number of Korean banks with access to trade financing. The eligible banks are Kookmin Bank, Shinhan Bank, KorAm Bank, Hana Bank, and Housing and Commercial Bank – the same banks as in KTEF-BOA.
Mr. Javed Hamid, IFC Director for East Asia and the Pacific said that the rapid usage of KTEF-Bank of America signed three months ago is an indication that the facility is playing a crucial role in providing trade finance to support an improving, but still challenging, financial situation in Korea. Trade finance is critical for Korean exporters to import the inputs required to produce goods for export, he added.
The facility is one of several IFC projects to help alleviate Korea's trade finance problems. IFC designed a similar trade enhancement facility for $100 million in June 1998 with Sumitomo Bank and another innovative trade finance product – the $50 million Korea Forfaiting Facility with West Merchant Bank -- in January 1999.
BOA is one of the top commercial banks in the United States with total assets of $595 billion after its merger with Nations Bank in September 1998. BOA has operations in several emerging markets and is one of the largest foreign trade finance banks in the Republic of Korea.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets and providing technical assistance and advice to governments and businesses.
