KB Financial Group and Shinhan Financial Group announced Sunday that they will each commit 110 trillion won ($75 billion) to promote "productive" and "inclusive" finance over the next five years.
This brings the total allocations by the country's five major banking groups — KB, Shinhan, Hana, Woori and NongHyup — to 508 trillion won.
Productive finance is a term promoted by the Lee administration focuses on productivity-boosting investment, providing venture capital and similar finance rather than conventional interest income models. Inclusive finance aims to increase access to loans for borrowers with low credit assessments.
Woori Financial made an 80 trillion won commitment to productive and inclusive finance in September. Hana Financial and NongHyup Financial have also decided to allocate 100 trillion won and 108 trillion won to the initiative, respective.
KB Financial explained it has earmarked 10 trillion won for the Public Growth Fund, a 150 trillion-won public-private fund to support investment in artificial intelligence and other advanced industries.
Another 68 trillion won will be used for corporate loans, while 15 trillion won will be put into direct investments.
Seventeen trillion won has been allocated for inclusive finance, supporting the wider public, financially underserved individuals, microbusiness owners and self-employed individuals.
“Based on our industry-leading capital strength and funding capabilities, KB Financial will support the growth of strategic industries and create drivers for the future of the nation's economy,” a KB Financial official said.
Similarly, Shinhan will inject 10 trillion won into the Public Growth Fund and allocate 10-15 trillion won for direct investments. Another 72-75 trillion won will be assigned to corporate loans.
It plans to allocate an additional 12-17 trillion won to inclusive finance, offering lower interest rates for microbusiness owners and self-employed individuals.
The group will also support regional infrastructure improvement projects, including wastewater treatment facilities and residential environment upgrades.
“Shinhan Financial is proactively building a virtuous financial cycle that supports industrial innovation and balanced regional development in line with its productive finance agenda,” a Shinhan Financial official said.
Both KB Financial and Shinhan Financial have set up dedicated teams under their holding companies to oversee the initiative and drive integration across their affiliates.
silverstar@heraldcorp.com
