Korea's five major commercial banks (KB Kookmin, Shinhan, Woori, Hana, and NH Nonghyup) are accelerating internal system overhauls and loans to expand productive finance. They judge that securing a limited pool of promising corporations ahead of others is key to achieving the goal of supplying productive finance totaling 430 trillion won.
According to the financial sector on the 20th, each bank recently distributed internal guidelines to all employees that define the scope of productive finance and investment directions by industry, and is strengthening credit strategy training for loan officers. They are also refining internal procedures, such as operating specialized examiners for each advanced industry or introducing a pre-screening system that selects and evaluates promising corporations in advance to execute loans quickly.
This move follows the expansion of productive finance policies that will be fully implemented by each holding company starting this year. Productive finance is a policy aimed at shifting the flow of financial funds away from safe-asset loans centered on real estate collateral to advanced, venture, and innovative corporations.
Through last month, commercial banks submitted their plans and supply volumes for expanding productive finance to the financial authorities, totaling at least 436 trillion won over the next five years (KB Kookmin 93 trillion won, Shinhan 93 trillion won, Hana 84 trillion won, Woori 73 trillion won, NH Nonghyup 93 trillion won). This could increase depending on the scale of inclusive finance support.
In particular, as all five major banks have set expanding productive finance as a core goal, competition to secure promising corporations first is intensifying. Because promising corporations are limited and a bank that invests preemptively is more likely to maintain a long-term financial transaction relationship with those corporations, the banking sector said profitability will hinge on who secures corporations with high growth potential and strong industry spillover effects first.
A senior official at a financial holding company said, "Because policy funds such as the Public Growth Fund also invest in innovative corporations, there are concerns about whether productive finance by banks will be executed as much as expected," and noted, "It is important to evaluate sound corporations quickly and accurately to secure them ahead of others."
Banks have also rolled out special promotional products exclusively for corporations under productive finance. Some banks began special sales early this month, while others will start sales within the month at the latest and plan to update them regularly going forward. To attract sound corporations, policies have emerged that offer preferential rates even when credit or collateral is insufficient for corporations in advanced strategic industries, or that add points to their credit ratings.