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KOREA CREDIT GUARANTEE FUND

Contents

SMEs in KoreaⅠ

Credit Guarantee Scheme in KoreaⅡ

An overview of KODITⅢ

Credit Guarantee System of KODITⅣ

Ⅴ Performances

Ⅵ Intensive Rescue Plan in 2009

SMEs in KoreaSMEs in KoreaⅠ

I. SMEs in KoreaI. SMEs in Korea

1. The Scope of SMEs

▪▪ Criteria : 1) No. of EmployeesCriteria : 1) No. of Employees2) Capital 2) Capital

No ofNo of

3) Sales3) Sales

IndustryIndustry No. of No. of EmployeesEmployees Capital Capital SalesSales

Manufacturing < 300 Capital ≤ $8M

Construction < 300 Capital ≤ $3M

Telecom & Multimedia < 300 Sales ≤ $30MTelecom & Multimedia 300 Sales $30M

Wholesales < 200 Sales ≤ $20M

Real Estate < 50 Sales ≤ $ 5MReal Estate < 50 Sales ≤ $ 5M

I. SMEs in KoreaI. SMEs in Korea

2. Korean SMEs by Industry [As of the end of Yr 2007]

Total No. of Enterprises

Wholesale& Retail

28%

Construction 3%

2,974,185

Total No. of Employees

Services57%

28%

Manufacture11%

11,149,134

[By No. of Enterprises]

I. SMEs in KoreaI. SMEs in Korea

3. Status of SMEs in Korea [As of the end of Yr2007]

SME (99%) LNo of enterprises

▪▪ Total: 2,976,646SME 2 974 185enterprises

No ofSME (88%)

L▪▪

SMEs: 2,974,185

Total: 12 612 692No of employment SME (88%)

L(12%)

▪▪ Total: 12,612,692SMEs: 11,149,134

T t l 1 049billi USDGDP SME (49%) Large (51%)▪▪ Total: 1,049billion USDSMEs: 514billion USD

ExportsSME (31%) Large (69%)▪▪ Total: 372billion USD

SMEs: 115billion USD

I. SMEs in KoreaI. SMEs in Korea

4. SMEs Financing

▪▪ Disadvantageous Environment for SMEsDisadvantageous Environment for SMEsI t t t SME LI t t t SME L◦◦ Interest rate on SME Loans Interest rate on SME Loans

(Unit: %)

▪▪ Main Obstacles for SME Financing Main Obstacles for SME Financing ◦◦ Insufficient Collateral Insufficient Collateral ◦◦ High Risk of DefaultHigh Risk of Default◦◦ High Transaction CostHigh Transaction Cost

Public Financing System for SMEs is Required!

Credit Guarantee System in KoreaCredit Guarantee System in KoreaⅡ

II. Credit Guarantee System in KoreaII. Credit Guarantee System in Korea

1. History

1961) E f d『『ThTh C dit G t R F d S t1961) E f d『『ThTh C dit G t R F d S t▪ 1961) Enforced『『TheThe Credit Guarantee Reserve Fund System』』

▪ 1967) Enacted『『TheThe SMEs SMEs Credit Guarantee Act 』』

▪ 1961) Enforced『『TheThe Credit Guarantee Reserve Fund System』』

▪ 1967) Enacted『『TheThe SMEs SMEs Credit Guarantee Act 』』

▪ 1976) Founded Korea Credit Guarantee Fund (KODIT)▪ 1976) Founded Korea Credit Guarantee Fund (KODIT)

▪ 1989) Founded Korea Credit Technology Guarantee Fund (KOTEC)

▪ 1999) Enacted『『The Regional Credit Guarantee Foundation Act』』

▪ 1989) Founded Korea Credit Technology Guarantee Fund (KOTEC)

▪ 1999) Enacted『『The Regional Credit Guarantee Foundation Act』』1999) Enacted The Regional Credit Guarantee Foundation Act』』

▪ 2000) Established Korean Fed. of Credit Guarantee Foundation

1999) Enacted The Regional Credit Guarantee Foundation Act』』

▪ 2000) Established Korean Fed. of Credit Guarantee Foundation

- 8 -

II. Credit Guarantee System in KoreaII. Credit Guarantee System in Korea

2. Credit Guarantee Institutions

Institution TargetBusiness

Source ofFunding

SupervisoryOrganization

KODIT(1976~) General

①Central Government②Banks[(0 225%±α)× SME L ]

FinancialServices

Commission[(0.225%±α)× SME Loans] Commission

KOTEC Tech- ①Central Government FinancialKOTEC(1989~) Oriented

Venture②Banks[(0.135%±α)× SME Loans]

ServicesCommission

①G t16 CGFs(1999~)

Small& Micro

①Government②Local Government③Banks

Small & MediumBusiness Admin.

- 9 -

[(0.02%±α)× SME Loans]

II. Credit Guarantee System in KoreaII. Credit Guarantee System in Korea

3. Outstanding Credit Guarantee

Outstanding CG Percentage to GDP(Unit: Trillion KRW)

KODITKODIT

KODIT KOTEC 16CGFsKODIT

KOTEC

Total

KOTEC

KODITCG/GDP

Whole CG/GDP 16 CGFsKOTEC

16 CGFs

An overview of KODITAn overview of KODITⅢ

III. About KODITIII. About KODIT

1. Profile

▪▪ Status: NonStatus: Non profit Special Legal Entity backed by Governmentprofit Special Legal Entity backed by Government▪▪ Status: NonStatus: Non--profit Special Legal Entity backed by Governmentprofit Special Legal Entity backed by Government

▪▪ Establishment : 1976Establishment : 1976

▪▪ Capital Fund : USD 4 billion (‘09)Capital Fund : USD 4 billion (‘09)

▪▪ Outstanding Guarantee : USD 40 billion (‘09)Outstanding Guarantee : USD 40 billion (‘09)

▪▪ No. of Employees : 2,200No. of Employees : 2,200

▪▪ Biz Network : 1 Head officeBiz Network : 1 Head officeBiz Network : 1 Head officeBiz Network : 1 Head office

8 Regional HQs, 99 Branches 8 Regional HQs, 99 Branches

III. About KODITIII. About KODIT

2. Governance

Financial Services C i i

Ministry of Strategy & Fi

Small & Medium Bi Ad i i t tiCommission

OperationSupervision

& Finance

Budget Planning

Biz Administration

Capital ContributionSupervision Contribution

Board of PolicyBoard of Policy

Chairman & CEOChairman & CEO

- 13 -

III. About KODITIII. About KODIT

3. Contribution to KODIT

Unit : million USD

1,440

664590

457

262388 1,584

111255255443 79

457

457 111255255

- 14 -

III. About KODITIII. About KODIT

4. Business Line

Infrastructure Infrastructure Credit Credit ConsultingConsulting

GuaranteeGuaranteeCredit Credit

GuaranteeGuaranteeCredit Credit

InsuranceInsuranceGuaranteeGuarantee InsuranceInsuranceIntegrate Integrate ManagementManagementConsultingConsulting

Credit Guarantee Credit Guarantee for helpingfor helping Consulting Consulting

for SMEsfor SMEsCredit Guarantee Credit Guarantee for Liability of for Liability of

Credit Insurance Credit Insurance for SME’s Trade Receivablesfor SME’s Trade Receivables

p gp gPrivate Investment Co.Private Investment Co.to invest on SOCto invest on SOC

yypromising SMEspromising SMEsto Banksto Banks

Credit Guarantee System of KODITCredit Guarantee System of KODITⅣ

ⅣⅣ. Credit Guarantee System of KODIT. Credit Guarantee System of KODIT

1. Basic Framework

Contribution Supervision

Gov.

Application Credit Guarantee

Capital C t ib ti

1 3

Credit Review

2SMEs BanksKODITContribution

Loan 4

ⅣⅣ. Credit Guarantee System of KODIT. Credit Guarantee System of KODIT

2. Type of Credit Guarantee

▪▪ Guarantee for Bank LoansGuarantee for Bank Loans▪▪ Guarantee for Bank LoansGuarantee for Bank Loans

▪▪ Commercial Bills GuaranteeCommercial Bills Guarantee

▪▪ Guarantee for Bidding, Contract, etc.Guarantee for Bidding, Contract, etc.

▪▪ Guarantee for Payment Guarantees of BanksGuarantee for Payment Guarantees of Banks

▪▪ Tax Payment GuaranteeTax Payment Guarantee

▪▪ PP--CBO GuaranteeCBO GuaranteePP CBO GuaranteeCBO Guarantee

▪▪ OthersOthers

ⅣⅣ. Credit Guarantee System of KODIT. Credit Guarantee System of KODIT

[Ref.] P-CBO Guarantee

▪▪ PPrimary rimary CCollateralized ollateralized BBond ond OObligation bligation

ⅣⅣ. Credit Guarantee System of KODIT. Credit Guarantee System of KODIT

[Ref.] P-CBO Guarantee

Hi t- First introduced in July 2000

I 2008 KODIT d P CBO t▪▪ History - In 2008, KODIT resumed new P-CBO guaranteesto alleviate the financial straits of SMEs.

▪▪ Performances• Outstanding Guarantee 2,630M. USD• Capital Fund 640M USDPerformances

(as of Dec.2009)

• Capital Fund 640M. USD• Leverage Ratio 4.1 times• Enterprises Guaranteed 1 2602009) Enterprises Guaranteed 1,260• Supply Goal in 2010 1,700M. USD

ⅣⅣ. Credit Guarantee System of KODIT. Credit Guarantee System of KODIT

3. Credit Rating System (CCRS)

F / S Quantitative Factor

QualitativeFactorCash flow Credit Rating

Industry Grade

KS1 ~ KS3

KA1 KA4

Quant. score Qual. score

Industry Grade KA1 ~ KA4

KB1 ~ KB4

Total ScoreKC1 ~ KC4

KD1 ~ KD3

Pre-Grade

Override

KE1 ~ KE3

Final Grade

ⅣⅣ. Credit Guarantee System of KODIT. Credit Guarantee System of KODIT

4. Credit Line & Coverage Ratio

▪▪ Credit LineCredit Line√√√ √ NormalNormal Ceiling for a Single Enterprise: Ceiling for a Single Enterprise: KRW 3 billionKRW 3 billion√ √ SpecialSpecial Ceiling for a Single Enterprise: Ceiling for a Single Enterprise: KRW 7 billionKRW 7 billion

(Only Applied when necessary for national economy)(Only Applied when necessary for national economy)

▪▪ Coverage RatioCoverage RatioggRating KS1 KS2~KS3 KA1~KA4 KB1~KB3 KB4~KE3

Percentage 50% 70% 75% 80% 85%

√ √ Long term Users (over 10yrs) : Long term Users (over 10yrs) : --5% 5% √ √ Gov. PolicyGov. Policy--related Guarantee : 100% related Guarantee : 100%

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PerformancePerformanceⅤ

ⅤⅤ. Performance. Performance

1. Credit Guarantee

Unit : million USD Unit : times

38,936

1210.4 12

8

10

7.8

9.09.29.1

9.8

7.9 8.08.5

7.8

6

4

0

2

Leverage ratio

※ Including P-CBO

ⅤⅤ. Performance. Performance

2. Credit Insurance

Unit : million USD Unit : times

1211.5

10.8

4,527

8

10

7.1 6.7

6

7.1

4.8 5.2

6.7

2

42.8

0

ⅤⅤ. Performance. Performance

3. Infrastructure Credit Guarantee

Unit : million USD Unit : times

4 145

12

1412.4 12.8 13.6

11.6

4,145

8

10

12

7.9

9.710.2

11.6

2

4

6

0

2

ⅤⅤ. Performance. Performance

4. Significant Role on Korean Economy

The Growth Rate of CGThe Growth Rate of GDP

The GrowthRate of CG supplied

The growth Rate of GDP

ⅤⅤ. Performance. Performance

4. Significant Role on Korean Economy

▪▪ Credit Guarantee-Effect on Korean Economy√

Effect on National Economy Numerical Value

√ As of the Yr 2008, CG Supplied: 24.7Billion US$

Effect on National Economy Numerical Value

1 Effect on Production 890 Million USD

2 Effect on Value Added 420 Million USD

3 Eff t E l t 23 K P3 Effect on Employment 23 K. Persons

Intensive Rescue Plan in 2009Intensive Rescue Plan in 2009Ⅵ

ⅥⅥ. Intensive Rescue Plan. Intensive Rescue Plan

1. Liquidity Trap

Gov’t-Funds Target rate(%)

Unit : billion USD

Gov t Funds Target rate(%)

SME loan balance extended in local currency

6 00%360 0

337.9 340.3 342.7 345.7 347.4

350.2 350.9 350.2 5.00%

5.00%

6.00%

330 0

340.0

350.0

360.0

296.0

3.00%

2.50%

2.00% 2 00% 2.00% 2.00% 2.00% 2 00%

3.00%

4.00%

300 0

310.0

320.0

330.0

2.00% 2.00% 2.00% 2.00% 2.00%

1.00%

2.00%

270 0

280.0

290.0

300.0

0.00%260.0

270.0

07 08 09. 1 09. 2 09. 3 09. 4 09. 5 09. 6 09. 7

ⅥⅥ. Intensive Rescue Plan. Intensive Rescue Plan

Unit : million USD

2. Capital InjectionUnit million USD

government

Enterprise

27

banks

1,584

1,440104 74

‘07 ‘08

624555

‘0907 08 09

ⅥⅥ. Intensive Rescue Plan. Intensive Rescue Plan

3. Blanket Support to help SME financing

Unit : billion USDBalance of credit guarantee over years

37.0

40.0

50.0

25.0 25.6 24.9 26.9

24.9 23.7 23.1 25.4

30.0

9.0

17.2 15.7

18.1

10 0

20.0

-

10.0

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09

ⅥⅥ. Intensive Rescue Plan. Intensive Rescue Plan

4. System Reform

AsAs--waswas AsAs--isisAsAs waswas AsAs isis

Thank YouThank You

Yong-Ju, Chin

International Affairs Team

Website : www kodit co krWebsite : www.kodit.co.kr

E-mail: intl@kodit.co.kr