Financial authorities set to support auto industry

Financial support for the auto industry, which has been severely affected by U.S. President Donald Trump’s tariffs, is now in full swing. Financial authorities will convene the five largest financial holding companies to request that they provide financing to companies expected to be heavily impacted by the U.S. tariffs.

The Financial Services Commission is in discussions with relevant ministries and agencies to provide policy financing to the automobile industry affected by tariffs, according to financial authorities on April 6. Given the potential impact on gross domestic product (GDP), all available support measures are expected to be mobilized. The sense of urgency has intensified following a recent analysis by the IBK Economic Research Institute, which projected that Korea's auto exports to the U.S. could decline by 18.59 percent this year compared to last year, due to the 25 percent tariff imposed on the auto industry.

The financial authorities are also expected to convene the five largest financial holding companies and policy financial institutions to urge them to facilitate a smooth flow of funds into the real economy. On Monday, Financial Services Commission Chairman Kim Byoung-hwan and Financial Supervisory Service Governor Lee Bok-hyun will hold a meeting with the chairmen of the five major financial holding companies, along with representatives from relevant organizations including the Korea Federation of Banks, the Korea Financial Investment Association, KDB, IBK, the Korea Credit Guarantee Fund, the Korea Deposit Insurance Corporation, the Korea Exchange, and the Korea Securities Finance Corporation. The purpose of the meeting is to assess the current financial landscape. Financial authorities estimate that the automotive industry’s total financial loans and marketable borrowings (exposure) amount to approximately 50 trillion won.

At the 9th Policy Finance Support Council held at the end of last year, financial authorities announced plans to provide a record-high 248 trillion won this year, together with policy finance institutions such as KDB, to support advanced strategic and future-promising industries. The government plans to significantly scale up disbursements, allocating 10 trillion won more than in previous years by the end of this month, and front-loading up to 60% of total funds in the first half to ensure an early response. It also confirmed the establishment of an Advanced Strategic Industry Fund worth up to 50 trillion won at KDB. If the National Assembly passes the amendment to the Industrial Bank Act and approves the government guarantee motion, the fund is expected to begin providing actual support within the year.


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