The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Yong Hwan Kim, “ Korea Eximbank”) announced on August 8 that it will expand the Bank’s credit line for the Untied Two-Step Loan* extended to Sberbank**, the largest state-owned bank in Russia, from USD 200 million to USD 700 million.

Chairman Yong Hwan Kim of Korea Eximbank and Chairman Herman Gref of Sberbank met at Sberbank headquarters in Moscow to sign the agreement increasing the credit line***.

* Untied Two-Step Financing provides credit to banks overseas, which in turn, will provide loans to Korean firms or local firms trading with Korean firms.

** Established in 1841, Sberbank is Russia’s largest state-owned commercial bank and currently accounts for 33% of loans and 46% of savings in Russia’s banking sector. As of 2011, Sberbank ranked 49th in the world in terms of equity capital.

*** As of July 2012, Korea Eximbank has interbank export credit agreements totaling USD 1 billion with six Russian banks.

During the signing ceremony, Chairman Yong Hwan Kim commented, “The signing of this agreement will allow us to more effectively provide financing to our firms via Sberbank’s network within Russia. We will provide funding for Korean firms participating in energy, natural resource, construction, and infrastructure projects implemented by the Russian government as well as projects in the Far East and Siberia.”

During his visit, Chairman Kim also signed a trade refinancing* agreement with Alfa Bank, the largest private bank in Russia.

The refinancing agreement will not set up a separate credit line, but will allow Russian importers of Korean products to obtain loans more quickly. Thus, the agreement is anticipated to promote greater exports of Korean automotives and machineries to Russia.

* Trade Refinancing is a form of short-term trade finance in which the entire payment for the export is paid to the exporter upon shipment of goods and the overseas bank repays Korea Eximbank for the export payment and financing costs after a fixed amount of time.

A representative of the Bank commented, “In addition to Russia’s vast resources and growth potential, its accession to the WTO will help open its markets further and promote transparency and thus make Russia a main export and investment target for Korean firms. In addition to revitalizing investment in the Russian, the two agreements will help support Korean operations in Russia by providing financing in line with growing needs.”