WASHINGTON, D.C., May 12, 1999 – In
response to the needs of Korean companies and banks that cannot access
trade finance, the International Finance Corporation will increase the
US$100 million trade enhancement facility which it established with Bank
of America last December by another $50 million. The facility guarantees
40 percent of Bank of America's exposure to eligible Korean banks for trade
finance transactions. The total amount of the facility will increase to
$150 million and IFC's guarantee will increase to $60 million.
The increase in the facility amount of the KTEF-BOA will promote Korean
trade by making more short-term trade finance available. It will give selected
Korean banks better access to letters of credit confirmations and bankers
acceptances; support trade between Korea and other markets; and increase
the number of Korean banks with access to trade financing. The eligible
banks are Kookmin Bank, Shinhan Bank, KorAm Bank, Hana Bank, and Housing
and Commercial Bank – the same banks as in KTEF-BOA.
Mr. Javed Hamid, IFC Director for East Asia and the Pacific said that the
rapid usage of KTEF-Bank of America signed three months ago is an indication
that the facility is playing a crucial role in providing trade finance
to support an improving, but still challenging, financial situation in
Korea. Trade finance is critical for Korean exporters to import the inputs
required to produce goods for export, he added.
The facility is one of several IFC projects to help alleviate Korea's trade
finance problems. IFC designed a similar trade enhancement facility for
$100 million in June 1998 with Sumitomo Bank and another innovative trade
finance product – the $50 million Korea Forfaiting Facility with West
Merchant Bank -- in January 1999.
BOA is one of the top commercial banks in the United States with total
assets of $595 billion after its merger with Nations Bank in September
1998. BOA has operations in several emerging markets and is one of the
largest foreign trade finance banks in the Republic of Korea.
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.