Ex-Im Bank Insurance Backs $1 Billion in U.S. Export Sales to Korea More than 2,400 Short-Term Insurance Applications Processed in 1998
An Export-Import Bank of the United States (Ex-Im Bank) short-term insurance program that literally restarted stalled U.S. export sales to South Korea during the Asian economic crisis has topped the $1 billion mark. This represents more than 2,400 insurance applications for the sale of U.S. goods and services that would not have been sold in Korea without Ex-Im Bank`s financing. It compares to just 58 applications processed the previous year.
This program demonstrates the critical need for Ex-Im Bank financing in markets where trade flows would otherwise have remained closed because commercial financing was unavailable, Ex-Im Bank Chairman James A. Harmon said.
Before the onset of the Asian economic crisis, U.S. banks and exporting companies were able to finance exports to Korea without Ex-Im Bank support. After the economic crisis hit, regional U.S. banks were unable to take Korean bank risk without Ex-Im Bank insurance. At money center banks, the demand by U.S. exporters to confirm letters of credit issued by Korean banks exceeded the commercial banks` risk limits. Ex-Im Bank stepped in immediately in January with a $750 million program of short-term export credit insurance for Korean banks and later authorized an additional $250 million.
Ex-Im Bank staff worked into the night month after month to meet the enormous demand from U.S. banks and companies for this critical service, said Harmon.
U.S. products supported under the program were mainly essentials such as medical equipment and raw materials for Korea`s industry including food products such as beef, fish, dairy, alfalfa; wood products; machinery and spare parts; chemicals; construction materials; hides; and pet food.
U.S. banks noted that the program proved effective in supporting U.S. exporters and Korean banks and buyers. Javier Barrera, relationship manager at The Trade Bank, Wells Fargo`s international bank, said some of our high technology customers are maintaining relations with Korean customers that they otherwise could not maintain. This is a direct result of using Ex-Im Bank insurance. Barrera added that the Ex-Im Bank insurance gives us an edge over the competition...
Gerald F. Rama, vice president and manager of the Philadelphia, PA-based trade finance and advisory group of First Union Bank (formerly CoreStates), whose main headquarters are in Charlotte, NC, said that Ex-Im Bank financing has helped First Union maintain its credit lines to correspondent banks in Korea: Through Ex-Im Bank we were able to increase the support we provided them in troubled times, which in turn services U.S. exporters.
Ex-Im Bank is an independent U.S. government agency that assists in financing the export of U.S. goods and services to industrializing and developing markets all over the world by providing loans, loan guarantees, and export credit insurance. In fiscal year 1998, Ex-Im Bank supported $13 billion of U.S. exports.