The Export-Import Bank of Korea (www.koreaexim.go.kr, “Korea Eximbank”) is to provide more than KRW 600 billion in marine financing ？ up 20% from last year ？ to support Korean maritime shipping companies struggling to cope with the slumping shipping market and shrinking availability of ship financing.

The measure was announced as part of Korea Eximbank’s plan regarding its marine financing operations in 2014, revealed during a ‘Briefing for CFOs of Maritime Shipping Companies’ held on the afternoon of February 19 at the bank’s Yeouido headquarters in Seoul.

The briefing was attended by Korea Eximbank Executive Director Hong Young-pyo, corporate finance executives from 13 Korean shipping companies*, and officials from the Korea Shipowners’ Association, among others.

* Hanjin Shipping, Hyundai Merchant Marine, SK Shipping, KSSline, KMTC, Sinokor Merchant Marine, Heung-A Shipping, Pan Continental Shipping, Daelim Corporation, Polaris Shipping, CK Line, Korea Line Corporation, Hayne Shipping.

Korean shipowners have had difficulty obtaining financing in recent years due to the retreat of domestic and foreign commercial banks (European banks in particular) from the ship financing market.

Korea Eximbank seeks to bring some relief to the ailing industry with a sharp increase in the amount of marine financing it provides as well as a number of improvements to its financing programs.

First, the bank is raising the loan-to-value ratio applied to used-vessel purchasing loans for SME and medium-large shipping companies from 70% to 80%; the age criteria for used vessels has also been relaxed, from vessels aged between 10 to 15 years to those between 5 to 15 years.

Second, Korea Eximbank is seeking to diversify its ship financing tools by introducing the ship bond guarantee, which guarantees project bonds issued by Korean shipping companies to finance vessel purchases.

Third, the bank is broadening the eligibility criteria for its ocean-going ship hiring loans (secured against future freight revenues) from Korean-made vessels to foreign-made ones, and will offer refinancing for existing ship purchase loans.

Finally, the bank intends to take advantage of the amended The Export-Import Bank of Korea Act, which allows the bank to participate in projects as an equity investor, by investing in eco-ship-related project companies or funds established to facilitate eco-ship purchases by domestic shipping firms.

Korea Eximbank Executive Director Hong Young-pyo commented at the occasion, “The support Korean shipping companies receive at home is still quite insufficient. Korea Eximbank will strive to bring relief to the Korean shipping industry by constantly improving and innovating its programs in a customer-oriented way.”

The bank plans to provide a total of KRW 20 trillion in credit to the ship and offshore sector this year (KRW 14 trillion to the ship sector and KRW 6 trillion to the offshore platform sector), up from last year’s KRW 19.1 trillion.