South Korea's four largest commercial banks — Kookmin Bank, Shinhan Bank, Hana Bank and Woori Bank — will provide a combined 2 trillion won ($1.4 billion) in financing to suppliers of SK hynix (000660.KS). The program aims to ease funding burdens for small and mid-sized companies in semiconductor materials, components and equipment, and to strengthen the competitiveness of the chip export supply chain.
The four banks signed a memorandum of understanding on semiconductor export supply chain financing with SK hynix and the Korea Trade Insurance Corporation at the Yongin semiconductor cluster in Gyeonggi Province on the 19th, according to financial industry sources on the 20th. Industry Minister Kim Jung-kwan, SK hynix President and Chief Executive Kwak Noh-jung and Korea Trade Insurance Corporation President Jang Young-jin attended the signing ceremony.
Under the agreement, SK hynix and the four banks will jointly contribute a total of 100 billion won to the Korea Trade Insurance Corporation. The agency will use the funds to provide 2 trillion won in export credit guarantees, or 20 times the contributed amount. The banks will supply working capital at preferential interest rates to SK hynix suppliers, using guarantee certificates covering 100% of the loan amount as collateral.
Hana Bank and Woori Bank will each provide 750 billion won, while Kookmin Bank and Shinhan Bank will each provide 250 billion won. Hana Bank will cover guarantee fees in full and offer preferential lending rates and foreign exchange fees. Shinhan Bank will also cover guarantee fees in full and offer preferential guarantee ratios, while Kookmin Bank will cover guarantee fees in full for three years. Woori Bank plans to cover about 12.4 billion won in guarantee fees.
Eligible borrowers are small and mid-sized suppliers recommended by SK hynix, including not only first-tier suppliers that deal directly with the chipmaker but also second- and third-tier suppliers. Hana Bank issued its first guarantee certificate to Hanyang ENG, and Kookmin Bank to Raon Robotics. The banks said they will deliver funds for raw material purchases and production expansion at semiconductor suppliers in a timely manner and expand productive finance.
"To keep raising the global competitiveness of the semiconductor industry, strengthening the competitiveness of small and mid-sized suppliers, not just large companies, is more important than anything else," a financial industry official said. "We hope this agreement will serve as seed money that lowers financing costs for suppliers and delivers needed funds at the right time to support corporate growth and innovation."