WASHINGTON, D.C., June 23, 1998 --- The International Finance Corporation has signed agreements to provide a financing package of upto US$152 million for Korea’s Hana Bank, comprised of a direct equity investment of up to US$22 million, a quasi-equity investment of US$30 million in the form of subordinated convertible bonds and notes, a US$20 million loan for IFC’s own account, and upto US$80 million in the form of a syndicated loan for the account of commercial banks.
The agreements were signed in Seoul by IFC Vice President for Investment Operations, Mr. Jemal-ud-din Kassum and Mr. Seung Yu Kim, CEO of Hana Bank.
IFC’s equity investments will reinforce Hana Bank’s capital position following the weakening effects of the East Asia financial crisis. The debt portion of the financing package will be extended in foreign currency to improve the bank’s foreign exchange liquidity position. IFC intends to mobilize substantial additional financing from the international financial markets. The proposed syndication will mark the return of private Korean banks to the international markets for long-term borrowings, help bolster the standing of Hana Bank, and catalyze fund-raising both domestically and internationally.
Mr. Kassum noted IFC’s strong institutional role in the project. IFC financial reporting requirements will lead to an upgrading of accounting and disclosure standards in line with international best practice. Hana Bank staff will receive environmental risk management training. IFC is also arranging technical assistance to improve client monitoring, loan classification and provisioning; upgrade management information systems, and strengthen overall risk management procedures.
As of end April 1998, Hana Bank had a market capitalization of about US$280 million. IFC has had a long relationship with Hana Bank and currently holds 0.52% of its equity.
Hana Bank is among IFC’s first investments in Korea since 1988. As a result of the financial crisis, IFC has mobilized investment funds and assisted in the restructuring of corporations and financial institutions in Korea. IFC’s investment in Hana Bank is expected to have a strong demonstration effect and to help restore confidence in the Korean banking system.
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.
