Emphasizing Policy Finance in the Financial Sector... Busy Times for the Three National Policy Banks

National Policy Banks Focus on Strengthening Policy Finance This Year
Emphasizing Roles in Korean-style (K) New Deal, Green Finance, and Small Business Support

[Asia Economy Reporter Sunmi Park] Since the beginning of the year, as the government and financial authorities have emphasized the role of policy finance in areas such as the Korean-style (K) New Deal, green finance, and support for small business owners, the pace of the three policy banks?KDB Industrial Bank, Korea Eximbank, and IBK Industrial Bank of Korea?has also accelerated. These banks have focused their business directions this year on strengthening policy finance and have begun establishing detailed plans, implementation, and organizational restructuring.

According to the financial sector on the 28th, KDB Industrial Bank took the first step toward creating the K-New Deal fund, which will inject a total of 20 trillion won over the next five years, by investing 510 billion won to form a policy-type New Deal mother fund. KDB Industrial Bank plans to match the 510 billion won it invested with private funds to establish the policy-type New Deal fund. The submission of proposals from asset management companies has already closed, and the selection process will be completed by the end of next month, after which sub-funds will be sequentially formed and invested to support the successful promotion of the K-New Deal.

Korea Eximbank has designated this year as the inaugural year for achieving global results of the K-New Deal. Centered on seven key support areas selected by Korea Eximbank?▲hydrogen energy, ▲wind and solar power, ▲secondary batteries and ESS, ▲future mobility, ▲5G and next-generation semiconductors, ▲pharmaceuticals and healthcare, and ▲digital and content?the bank plans to provide 80 trillion won in support over ten years until 2030.

IBK Industrial Bank of Korea is establishing the ‘IBK New Deal Fund’ to discover and nurture New Deal innovative companies, investing a total of 1 trillion won over five years with 200 billion won annually. Through this fund, IBK plans to focus investments on companies carrying out the bank’s five core New Deal tasks: strengthening the D.N.A (Data, Network, Artificial Intelligence) ecosystem, spreading low-carbon and distributed energy, and building an innovative green industry ecosystem.

The financial authorities are emphasizing the role of policy finance not only in the K-New Deal but also in green finance. Do Gyu-sang, Vice Chairman of the Financial Services Commission, reinforced the role of policy finance at the 3rd Green Finance Promotion Task Force (TF) plenary meeting held earlier this week. The financial authorities plan to prepare investment strategies for each institution within the first half of the year to expand the share of green sector support by policy finance institutions from the current 6.5% to about 13% by 2030, and to maximize the synergy of policy finance support, they will also form and operate a consultative body among policy finance institutions.

To this end, the three policy banks have already established dedicated green finance organizations. KDB Industrial Bank expanded its policy planning division into the Policy and Green Planning Division and newly established the ‘Environmental, Social, and Governance (ESG)’ and New Deal Planning Department under it. Korea Eximbank created a dedicated green industry finance support organization, including the Green New Deal, through an industry-specific organizational restructuring, such as the renewable energy industry team. IBK also formed an ESG management team within the Strategic Planning Department of the Management Strategy Group to oversee green management.

An official from one of the policy banks said, "This year, the policy banks commonly aim to expand their roles as policy finance institutions and have prepared business directions and plans accordingly. We are ready to immediately follow the government and financial authorities’ detailed plans once they are announced."