Korea Eximbank prepares ECA Version 2.0 to boost export

The Export-Import Bank of Korea (Korea Eximbank) Chairman and President Yoon Hee-sung [Photo by Han Joo-hyung]

The Export-Import Bank of Korea (Korea Eximbank) is gearing up to upgrade its traditional model of financial support for promoting exports of Korean companies to a new level with the introduction of Export Credit Agency (ECA) Version 2.0.

In a recent interview with Maeil Business Newspaper on July 18, marking almost a year since he assumed the position, Chairman and President Yoon Hee-sung outlined his vision for the bank’s future. He emphasized that Korea Eximbank’s core objectives would revolve around strengthening export competitiveness, advancing national interests, and expanding global influence. To achieve these goals, Yoon proposed a more flexible and strategic approach, exploring new functionalities and roles for the institution.

Yoon, the first bank executive to rise through the ranks within Korea Eximbank’s history, is contemplating the organization’s long-term development direction based on his extensive experience in the banking industry.

His management strategy, termed ‘Beyond Core,’ aims to move beyond the core responsibility of supporting export expansion and evolve the ECA to adapt to the changing landscape.

As part of this strategy, Korea Eximbank is considering activating limited investment operations. Similar to Japan Bank for International Cooperation (JBIC) and Export Development Canada (EDC), which have set up investment-specific subsidiaries for development finance in developing countries, Yoon said, “JBIC has created a subsidiary and operates it in joint venture format with private institutions. We are considering a similar model. There are times in overseas infrastructure projects where we need to engage in equity investment, apart from traditional loans and guarantees. Korea Eximbank’s investment business aims to play a role as a stepping stone for Korean companies to expand their presence in the international market.”

To actively support Korean companies in the global market, plans are underway to reevaluate the current 24 overseas offices and five local subsidiaries of the bank. Considering that other ECAs are competitively expanding their overseas networks, Korea Eximbank is also exploring the possibility of opening additional offices in countries such as Poland and Australia.

Yoon emphasized that, in addition to focusing on future visions, the bank will continue to devote its efforts to its current core role of providing export finance support.

“We will continue to provide proactive financial support for securing cutting-edge technologies in strategic industries such as batteries, semiconductors, and biotechnology, enhancing the competitiveness of large-scale projects such as infrastructure, nuclear power, and defense, and ensuring the stability of supply chains.”

During Yoon’s tenure, Korea Eximbank’s presence has significantly increased. One example of this is last month’s meeting between President Yoon Suk Yeol and Vietnamese State President Vo Van Thuong in Hanoi, during which Korea Eximbank, represented by Yoon, signed a $2 billion memorandum of understanding for financial cooperation with Vietnam’s finance ministry.

In a recent engagement, Yoon also traveled to Poland, where he took part in the ‘Ukraine Reconstruction Cooperation Business Forum,’ an event led by President Yoon. Speaking about the prospects of participating in Ukraine‘s reconstruction efforts, he emphasized that immediate entry of private capital might pose challenges. Thus, he highlighted the importance of public funds or the crucial role of ECAs in supporting post-recovery initiatives and infrastructure development, ultimately paving the way for substantial private capital investment.

Poland’s rise in prominence as a market of specialized defense exports is drawing significant attention, but the importance of Middle East infrastructure projects cannot be overlooked. Korea Eximbank has already taken proactive steps by signing framework agreements and financial cooperation memorandums of understanding with key partners in the Middle East. Through its strategic approach of ‘First Finance, Then Order,’ the bank aims to provide vital support, enabling Korean companies to enhance their success rates in project bids within the Middle East market. Notable examples include a substantial $6 billion framework agreement with Saudi Arabia‘s Aramco and another noteworthy $5 billion agreement with the Abu Dhabi National Oil Company (ADNOC) in the United Arab Emirates.

“The Middle East is actively pursuing eco-friendly projects aimed at transitioning from fossil fuels to carbon neutrality. Korean companies are poised to contribute significantly to these initiatives, and we are committed to providing them with wholehearted support in their endeavors.”

With the global supply chain facing uncertainties, especially in the semiconductor industry, Yoon plans to respond proactively. “Since January last year, we have been operating the Global Supply Chain Response Program, and this month, we will add resource processing, resource recovery, and logistics services to the support areas. This includes measures to establish a domestic production base for materials, components, and equipment with high import dependence and to strengthen vulnerable supply chains.”

As Korea Eximbank’s role continues to grow, it encounters certain practical limitations. Over the past decade since the 2014 legal revision, the bank’s statutory capital has remained fixed at 15 trillion won, thus constraining the possibility of further capital expansion. Emphasizing the importance of capital expansion, Yoon underscored that it is imperative for Korea Eximbank to strengthen and extend its role in the future.