Seoul - Five major South Korean commercial banks are in talks to issue a syndicated loan to finance the country's arms exports to Poland. An industry source disclosed on Friday that the banks are considering this move following significant defense deals secured by South Korean companies last year. The deals, worth 17 trillion won (US$12.9 billion), included the supply of K2 tanks, K9 self-propelled howitzers, FA-50 light attack aircraft, and Chunmoo multiple rocket launchers to Poland. However, efforts to sign additional contracts worth 30 trillion won this year have been hampered by the Export-Import Bank of Korea (Eximbank) reaching its lending limit due to last year's mega-deals.
To address this challenge, KB Kookmin, Shinhan, Hana, Woori, and Nonghyup banks are collaborating with the government to find financial solutions.
According to Yonhap news Agency, the syndicated loan plan involves an initial support of about $2.7 billion. The banks are still negotiating with the government to finalize the arms export deal with Poland. A syndicate loan, typically offered by a group of lenders, is considered for projects requiring larger loans than a single lender can provide. This initiative is part of South Korea's strategic move to become the world's fourth-largest arms exporter by 2027, up from eighth place in 2021.