The government and the financial sector will expand their productive finance supply plan for the next five years to a total of 1,560 trillion won. That is up 310 trillion won from the previous 1,250 trillion won plan. Financial authorities also plan additional liability exemption measures related to productive finance to support financial companies' active investment and lending alongside the expanded funding supply.

The Financial Services Commission said on Sept. 15 it held the fifth Productive Finance Council for the financial sector at the Government Complex Seoul on Sept. 14, chaired by FSC Vice Chairman Kwon Dae-young (권대영), to discuss the status of productive finance initiatives and future management measures. Financial holding companies, securities and insurance firms, and policy lenders including the Korea Development Bank, Industrial Bank of Korea and Export-Import Bank of Korea attended the meeting.

The financial sector's productive finance supply plan for the next five years totals 1,560 trillion won, consisting of 628 trillion won from private finance and 932 trillion won from policy finance. It is an increase of 310 trillion won from the 1,250 trillion won announced in July. The rise reflects expanded supply plans by existing financial companies, along with new participation by the Export-Import Bank of Korea, Suhyup Bank and Samsung Securities.

The FSC plans to focus on embedding productive finance into financial companies' internal management systems, alongside expanding the supply scale. Kwon referred to existing financial practices centered on collateral and guarantees and stressed that productive finance capabilities must be internalised and systematised, rather than being productive finance in name only.

Financial companies will also release a “Fact book” from the fourth quarter of this year containing their productive finance performance. Each company will publish a “productive finance white paper” in December covering the definition and scope of productive finance, goals, organisation, progress and best practices, and will announce an annual report with yearly performance in May next year.

The FSC decided to additionally prepare measures to broaden the scope of liability exemptions across productive finance, following the investment and lending exemptions being applied to financial institutions participating in the Kookmin Growth Fund. It plans to review concrete measures after collecting views from the financial sector at the council.

FINANCIAL AUTHORITIES: “TO OPERATE UNTIL THE FINANCIAL SECTOR’S FUNDAMENTALS ARE COMPLETELY CHANGED”

By financial holding company, Shinhan Financial Group supplied 4.7 trillion won of productive finance-related loans out of a 5.9 trillion won increase in corporate lending through the end of July this year. That is about 79 percent of the total increase in corporate lending. Shinhan Financial Group is linking productive finance performance to key performance indicators at major subsidiaries.

Woori Financial Group raised its supply target for its five-year, 80 trillion won “Future Shared Growth Project,” announced in September last year, to 90 trillion won in June this year. It supplied 22.9 trillion won through July, already exceeding its target for this year of 21.8 trillion won.

iM Financial Group created and reorganised organisations to 추진 productive finance at the holding company and key affiliates and reflected productive finance performance in evaluations of executives and branches. Centered on iM Bank, it plans to expand support for innovative regional small and medium-sized companies by supplying products linked with the Korea Credit Guarantee Fund.

In the securities industry, Kiwoom Securities worked with university technology holding companies and set up a fast-track for mezzanine investment in listed firms, while Samsung Securities plans to expand venture capital supply based on its short-term financing business licence. In the insurance industry, Hanwha Life is increasing investment in infrastructure for future industries such as data centres, and Meritz Fire & Marine Insurance introduced a productive finance item into its KPI framework and is reflecting investment performance in evaluations.

Policy financial institutions are also expanding supply. The Korea Development Bank is operating loan products totaling 90 trillion won for productive finance, and the Kookmin Growth Fund approved 17.9 trillion won of support as of the end of August out of this year's target of 30 trillion won. Of that, approved amounts for companies located in regions total 7.22 trillion won.

Industrial Bank of Korea is 추진 the “IBK 30-300 Project” to supply 300 trillion won or more in productive finance by 2030, and supplied 39.4 trillion won through the end of July. The Export-Import Bank of Korea will support loans totaling 78.5 trillion won this year and, from this month, will launch a productive inclusive finance program for small and venture businesses linking 150 billion won in VC investment, 100 billion won in technology special-case loans and 50 billion won in expedited special-case loans.

Kwon said he would continue to operate the productive finance council until the financial sector's fundamentals are completely changed in a direction that contributes to national economic growth, and said he would also keep checking difficulties on the ground.