Exim Bank set to support inter-Korean economic cooperation

SEOUL: The Export-Import Bank of Korea (Exim Bank), one of South Korea's state-run policy lenders, said Tuesday that it will provide full financial support for future inter-Korean economic cooperation projects.

With the ongoing thaw in relations on the Korean Peninsula, hopes are high for South-North economic cooperation in transportation and humanitarian sectors.

The two sides are holding working-level talks on road and railway connections. "The bank will aim to become a cornerstone in economic cooperation with North Korea, making full use of our experience in inter-Korean economic cooperation, financing overseas projects, and ties to wide range of international financial networks," bank President Eun Sung-soo said in a press meeting.

"Exim Bank will be the supporting force in leading inter-Korean economic cooperation and development."

He said the state-run Inter-Korea Cooperation Fund (IKCF), which is designed to finance economic cooperation and social and cultural exchange between the two Koreas, will play a role in broadening inter-Korean relations.

Entrusted by the government, Exim Bank manages the 1 trillion won (US$890 million) fund. "The IKCF will be expanded when the two Koreas agree to join hands in economic development," said Eun, a former chief of the Korea Investment Corp., South Korea's sovereign wealth fund.

"Upcoming on-site inspections and feasibility tests of North Korean roads and railways are expected to be funded by the IKCF."

Also, the bank will strive to downsize and engage in restructuring efforts to help reach an annual 1 trillion won (US$890 million) in profit by 2030.

"In 2030, Exim Bank will become a policy lender with expertise in overseas transactions," said Eun.

The bank suffered a net loss of 1.5 trillion won in 2016, hit by higher provisions against its loans extended to the country's ailing shipbuilding industry.

It was the first time that the bank reported an annual net loss since its foundation in 1976. Under its reform plan announced in late 2016, Exim Bank has introduced a tighter loan screening process to improve its risk assessment capability.

It will close some branches and offices by the end of this year.