Korea Credit Guarantee Fund signs W300b deal with Hyundai Motor Group, 8 banks to back auto parts firms

Korea Credit Guarantee Fund announced Wednesday that it has signed a mutual-growth finance agreement with Hyundai Motor, Kia and eight banks to provide 300 billion won ($210 million) in guarantees supporting automotive parts companies' development of future mobility technologies and overseas expansion.

The agreement brings together KB Kookmin, NH NongHyup, Woori, Hana, Industrial Bank of Korea, Shinhan Bank, iM Bank and BNK Kyongnam Bank. The structure pools contributions from a large conglomerate, a policy finance institution and commercial banks to support suppliers participating in Hyundai Motor Group's export projects.

Hyundai Motor Group will contribute 8 billion won as a special endowment. KB Kookmin, NH NongHyup, Woori, Hana and Industrial Bank of Korea will each contribute 2 billion won, while Shinhan Bank will provide 1 billion won. iM Bank and BNK Kyongnam Bank will add 600 million won and 400 million won, respectively, bringing the total fund to 20 billion won.

Drawing on those contributions, Korea Credit Guarantee Fund plans to supply 300 billion won in joint project guarantees to tier-2 and tier-3 suppliers participating in Hyundai Motor Group's export projects.

Eligible companies will receive a 100 percent guarantee ratio and a fixed annual guarantee fee rate of 0.8 percent. Through fee support from the participating banks, the guarantee fee will be waived entirely in the first year, with a reduction of 0.3 percentage points applied in the second and third years.

"We hope this agreement provides meaningful help to automotive parts companies preparing to enter the future mobility market as they seek to secure financing," a Korea Credit Guarantee Fund official said. "Going forward, we will continue to build a solid cooperative framework with large corporations and financial institutions to strengthen the global competitiveness of Korean businesses and foster an ecosystem of shared growth between large and small companies."

Meanwhile, last year Korea Credit Guarantee Fund supplied 19.74 trillion won in guarantees to new-growth-engine sectors, 20.11 trillion won to startups and 17.25 trillion won to export-oriented companies. It also applies differentiated guarantee limits based on the research, development and commercialization stages of technology companies, and operates programs linking guarantees with direct and private investment.