Busan Bank (President Bang Seongbin) has become the first private bank in Korea to independently issue a Refund Guarantee (RG) worth USD 164 million to a domestic mid-sized shipbuilder, HJ Shipbuilding & Construction, ushering in a new wave in the shipbuilding finance landscape.
On July 1, Busan Bank stated that this RG issuance marks the first case since the implementation of the "RG Exemption for Compliance with Mid-Sized Shipbuilder Order Guidelines" system, which was approved by the Financial Services Commission's Exemption Review Committee in May. The bank emphasized the significance of a private bank providing full support without a policy finance institution's guarantee.
This guarantee was issued to cover the construction contracts for two out of four 8,000 TEU-class container ships ordered by a Greek shipowner in November 2024. With policy finance institutions having exhausted their RG limits, Busan Bank stepped in to guarantee both vessels, including one ship already backed by Korea Trade Insurance Corporation.
According to the shipbuilding industry, private banks have been reluctant to issue RGs to mid-sized shipbuilders for several years due to concerns over deteriorating financial soundness. In this context, Busan Bank's decision is seen as a proactive move based on the business potential and industrial impact of the vessels.
In fact, HJ Shipbuilding & Construction is the only domestic mid-sized shipbuilder with a strong track record in building special-purpose defense vessels, and has recently expanded its presence in the eco-friendly fuel-based container ship market. However, despite increasing orders, RG issuance limits have consistently been a hurdle, highlighting the need for full participation from private banks.
Busan Bank stated, "We applied a new screening standard that reflects not only the current financial status of mid-sized shipbuilders, but also the future growth potential and industrial value of their orders," adding, "This case demonstrates that private financial institutions can actively contribute to industrial recovery."
A representative from HJ Shipbuilding & Construction said, "Thanks to the bold support from Busan's leading bank, we can accelerate additional orders," and added, "We aim to become the central pillar for revitalizing the regional economy and for the resurgence of K-shipbuilding."
The two vessels covered by the RG issued by Busan Bank are scheduled for delivery in July and October 2026, respectively. The industry is watching closely to see if this case will become a turning point for financial support models for mid-sized shipbuilders.
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