SEOUL, South Korea is mulling financing options with major commercial banks to help clear hurdles for local defense firms' bid to export some 30 trillion won (US$23 billion) worth of weapons to Poland, military officials said Monday.
Last year, South Korean companies secured major deals worth 17 trillion won -- South Korea's largest-ever arms deal -- to supply K2 tanks, K9 self-propelled howitzers, FA-50 light attack aircraft and Chunmoo multiple rocket launchers to Poland.
Their bids to sign additional contracts worth 30 trillion won with Poland this year have faced obstacles as the state-run Export-Import Bank of Korea (Eximbank) is unable to provide loans and guarantees for the proposed sales after hitting its upper limit from last year's mega deals.
A bill calling for an increase in the Eximbank's equity capital and maximum legal cap on loans and guarantees is currently pending in the parliament.
In response to calls for the government's support for what would be the nation's largest-ever arms exports, the defense ministry held a working-level meeting with senior officials of five commercial banks -- KB Kookmin, Shinhan, Hana, Woori and Nonghyup -- earlier in the day to discuss financial measures, according to ministry officials.
"The government and local companies have been consulting measures to support arms exports to Poland," a ministry official said, without elaborating on the specific plan citing the ongoing discussions.
Among the potential options is a syndicate loan provided by the commercial banks to fund the comprehensive agreements with the Polish government, according to multiple sources familiar with the issue.
A syndicate loan refers to a form of financing offered by a group of lenders when a project requires large loans for a single lender.
The latest move comes as South Korea is seeking to capitalize on its robust weapons exports to Poland with the goal of becoming the world's No. 4 arms exporter by 2027, up from eighth place in 2021.
Source: Yonhap News Agency