I. Review of Financial Assistance to SMEs in 2008
1. Banks Loans to SMEs
(2008) Outstanding amount of loans to SMEs by 18 domestic banks increased by KRW 52.4trl. (from KRW 370trl in 2007 to KRW 422.2trl in 2008)
(December 2008) With the year-end effect, the amount of SMEs loans decreased by KRW 1.8trl. However, when including special set-off between loans and deposits carried out to support SMEs (KRW 0.7trl), amortization and sell-off of bad debts (KRW 0.9trl), the actual amount of SME loans was decreased only by KRW 70.9bn.
* With the year-end effect (settlement of financial statements at the end of the year, settlement of B2B transaction, etc.), SMEs loans tends to decrease usually in December.
When comparing the average decrease amount of SME loans in December for the past 5 years (KRW -2.8trl) with the decreased amount in December last year (KRW -3.6trl), it is not so noticeable.
2. Fast-Track (Special Assistance Program to Tackle Liquidity Problems of SMEs)
KRW 2.8trl was provided to 1,672 companies through the Fast Track Program from October 13 to December 31, 2008.
KRW 1.4trl was provided to 413 companies which experienced loss from currency option such as KIKO.
Assistance through the Fast Track Program has been accelerated since last December; the number of assisted enterprises increased by 2.5 times.
3. Issuance of P-CBO
KRW 1trl of P-CBO was issued in 2008 to help solve financial difficulties of SMEs which could not issue corporate bond due to their poor credit rating.
Corporate Bond Market Stabilization Fund underwrote the 3rd issuance, which benefited joined enterprises with lower issuing rate (from 8.4% to 6.6%) and lower additional rate. (from 50bp to 5bp)
4. Consultation on SMEs' Financial Difficulties
Since the opening of the ｢Consultation Center for Financial Difficulties of SMEs｣, the accumulated number of consultation cases reached 1,060. (including the consultation carried in related organization of banks)
Banks admitted 526 cases (49.6%) and provided KRW 504.3bn.
- 534 cases were obtained through persuasion,
- 176 cases were transferred to relevant institutions
- 114 cases were rejected
- 35 cases are under scrutiny.
< Evaluation on Financial Assistance in 2008 >
SMEs supports in 2008 was effective in terms of quantity and quality
In terms of quantity (KRW 52.4trl), the increase amount of SMEs loans in 2008 was similar to the increased amount in 2006~2007 on the average (KRW 56.7trl), and was higher than the average past 5 years (KRW 33.7trl).
Although the net increase amount in the second half of the year was less than that in the first half of the year, increase amount recovered since the government's policy announcement for the assistance.*
Net increase amount of SMEs loans (trillion KRW):
(Aug. 08) 2.6 → (Sept. 08) 2.9 → (Oct. 08) 3.4 → (Nov. 08) 4.1 → (Dec. 08) -0.8
(the real decrease is 0.1 excluding special set-off between loans and deposits)
In terms of quality, financial support to SMEs which had financial difficulties due to global financial crisis was extended.*
In case of bank A, the financial assistance to SMEs below grade 5 was expanded to 40% at the end of 2008 from 38.1% at the end of previous year.
Through the Fast Track Program, KRW 2.8trl was provided to enterprises (graded 5~7 out of 10 grades) with liquidity difficulties by KIKO, etc.
* Please refer to the attached PDF for details.