Korea Eximbank (www.koreaexim.go.kr, Chairman Yong Hwan Kim) concluded a Forfaiting* Agreement with KB Kookmin Bank (President & CEO Byong Deok Min) on June 21.

*Forfaiting is trade finance in which a forfaiter purchases a bill of exchange issued by a bank in a developing country based on a letter of credit, from an exporter without recourse**.

**Without recourse means that payment cannot be sought from the respective exporter in the event the importer refuses payment.

○ According to the agreement, Korea Eximbank will take on all risks involved in the repurchase of an export bill purchased by KB from trading companies.

□ This agreement follows an MOU signed on April 28 with 8 domestic commercial banks strengthening financing cooperation for overseas projects. The agreement is anticipated to maximize the synergy of coupling Korea Eximbank’s expertise in forfaiting export finance since 2001 with the demand for bills of exchange by trading companies of KB, which has the largest number of branches in Korea.

○ An official from Korea Eximbank stated, “With demand for a bill of exchange purchase by export companies without recourse increasing after the introduction of K-IFRS last year, Korea Eximbank expects to fulfill demand for USD 500 ~ 600 million annually.

* The size of Korea’s forfaiting market is approximately USD 10 billion. Through forfaiting, there is no repayment risk to exporters so the amounts are not appropriated in the financial statement of the firm as debts.