The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Yong Hwan Kim, “ Korea Eximbank”) announced on September 3 that it will provide USD 120 Million in project finance (PF) jointly with Shinhan Bank and Woori Bank for the Bogota Bus Transit Card and Information Systems Project in Columbia awarded to LG CNS.

The project represents the largest-ever ITS* export for Korea, the aim of which is to install Seoul’s transportation card payment system and Korea’s transportation information system in Bogota, a city of 10 million.

* Intelligent Transportation Systems: system providing optimal traffic operation through analysis of traffic conditions, management of public transportation, and automatic payment of transportation fees.

LG CNS, participating as its sponsor, will be responsible for the project from installation to operation.

The project is notable in that it would be the first to be financed in the form of a joint PF between a government-run bank and Korean commercial banks.

What made this possible was the initiative of Korea Eximbank in forming a consultative group with eight Korean commercial banks (including Shinhan Bank) by signing an MOU for the strengthening of cooperation on providing financial support to overseas projects in April 2011, shortly after the appointment of Chairman Kim.

The MOU and the consultative group yielded material results in the form of risk mitigation for the commercial banks through the shortening of loan maturities and the provision of loan guarantees by Korea Eximbank, culminating in the joint participation of Shinhan Bank and Woori Bank in the Bogota Project.

A Korea Eximbank official stated, “We were able to persuade commercial banks to participate in overseas project financing thanks to our previous efforts in forming consultative groups with various financial institutions and in providing them financial arrangement and advisory services,* capitalizing on our accumulated experience and expertise in the field. We will continue to work together with commercial banks to provide long-term financing for Korean firms competing for orders.”

* Total of 16 cases amounting to USD 20.7 billion

In response, a representative of the Shinhan Bank commented, “Korea Eximbank’s optimal structuring of financing and risk significantly decreased the risk of participating in long-term projects. Evaluating the loan jointly with Korea Eximbank offered a good opportunity to obtain a comprehensive understanding of overseas project financing.”

Korea Eximbank signed an MOU for Sustainable Growth with LG CNS this March, and is also providing KRW 2.7 billion of credit for SME exporters* participating in the Bogota project as suppliers, continuing its policy of promoting the joint entry of large companies and SMEs into foreign markets.

* Biosmart Corporation (RF Card), ATEC Co. Ltd (Transportation Payment System), Infotrust Corporation (PF Card Chip)