IBK aims to extend over 10 tln won in SME loans next year

SEOUL, Nov. 19 (Yonhap) -- South Korea's state-owned Industrial Bank of Korea (IBK) said Wednesday it is intending to extend a larger-than-planned 10 trillion won (US$6.89 billion) in loans to smaller firms this year and hopes to expand the provision further in 2009 to help ease their cash shortages.

"The bank has already met its original target of providing 8 trillion won in
loans to small and medium enterprises (SMEs) this year. Next year, we are aiming
at increasing such loans to between 10 and 12 trillion won on the back of
expected capital base increase," Yun Yong-ro, chairman of IBK, told a press
conference. IBK caters mainly to small and medium enterprises.
His remarks came as the government plans to inject 1 trillion won into IBK in a
bid to raise the bank's lending capacity by 12 trillion won for smaller companies
as part of sweeping measures to calm the financial markets.
The government is considering making an investment in-kind in IBK by 500 billion
won by this year with the remainder to be made via a cash injection next year.
"Considering economic conditions and loan demand, IBK plans to make efforts to
increase lending for smaller firms to as great a level as possible," Yun said.
South Korean lenders, hit by the global financial turmoil, have been increasingly
reluctant to extend loans particularly to smaller firms amid the slowing economy
and a credit crunch.
Yun also added the government and IBK are in consultation over how much money the
lender would pool into a 10 trillion won fund to stabilize the bond market.
The Financial Services Commission plans to push to create a fund into which
existing institutional bond investors, such as banks and the state pension fund,
would pool money with the aim of buying a wide range of bonds, including
corporate debt.
IBK, which is 57.7 percent owned by the Finance Ministry, posted a net profit of
144 billion won in the third quarter, down 34 percent from a year ago.