JEONNAM-GWANGJU — The Kwangju Bank has stepped in with large-scale financing to help a mid-sized local shipbuilder fulfill a vessel order.
The Kwangju Bank said it recently issued a refund guarantee worth $36.81 million to Daehan Shipbuilding, based in Haenam County in Jeonnam-Gwangju Integrated Special Metropolitan City, the newly merged administrative unit combining Jeollanam-do province and the city of Gwangju. The guarantee supports a construction contract for a 157,000-ton crude oil tanker.
A refund guarantee is a financial product under which a bank guarantees the advance payments a shipowner has made to a shipbuilder. It ensures the return of those payments if the shipbuilder fails to deliver. In the shipbuilding industry, it is considered an essential financing tool for carrying out a construction contract once an order has been won.
What sets this case apart is that The Kwangju Bank issued the full guarantee through its own credit review, without a separate guarantee from a state-run policy lender.
The bank said it gave high marks to Daehan Shipbuilding's improved financial structure and its capacity to carry out construction reliably. On that basis, it said, it delivered what it described as productive finance — supplying capital to a core regional industry when it was needed.
The Kwangju Bank had previously provided guarantees for three vessels ordered from Daehan Shipbuilding, working alongside state-run policy lenders. This time it decided to extend support based solely on its own credit assessment, strengthening its role as the region's leading financial institution.
Daehan Shipbuilding is a leading mid-sized shipbuilder in the region with proven technology and a backlog of orders. The refund guarantee secures the financial stability it needs to carry out the shipbuilding contract. The move is also expected to ripple through the regional shipbuilding sector, expanding work for local suppliers and creating jobs.
The financing is seen as a sign of The Kwangju Bank's commitment to growing alongside the regional industrial ecosystem, ahead of the coming competition to serve as primary treasury bank for Jeonnam-Gwangju Integrated Special Metropolitan City.
"This refund guarantee is a meaningful case of supporting the growth of a local company in step with the government's policy of backing the shipbuilding industry," said Kim Jong-hoon, deputy president of The Kwangju Bank. "As the leading financial institution of Jeonnam-Gwangju Integrated Special Metropolitan City, we will help strengthen the competitiveness of regional industry and revitalize the local economy."