Magazine article American Banker

Conn. Bank to Offer Credit to Korean Exporters

Magazine article American Banker

Conn. Bank to Offer Credit to Korean Exporters

Article excerpt

A Connecticut bank that specializes in lending to small and midsize manufacturing companies is trying to capitalize on South Korea's economic turmoil.

First National Bank of New England will begin offering trade financing in February to Korean manufacturers that export to the United States, according to Brett Silvers, chairman and president of the Hartford, Conn., lender.

"There wasn't much opportunity to lend creatively in that market before," Mr. Silvers said. "Korea was considered a developed country that didn't need much financing."

But that changed in December when Korea's currency and stock market plunged, leading to hundreds of corporate bankruptcies and a squeeze on credit available to smaller businesses.

"There appears to be a severe local credit crunch with no lending whatsoever," Mr. Silvers said. "In a credit crunch, smaller companies get hit the hardest and for the longest period."

Stephen Green, senior vice president at First National, said, "Before the crisis, Korea wasn't as attractive because their banking sector was so strong and they had sufficient trade financing."

Because many small Korean businesses are having a hard time financing their inventories, First National plans to act as an intermediary between such companies and their U.S. customers.

The bank will issue a letter of credit that essentially pays for products being shipped to U.S. customers. First National will collect directly from the U.S. company within six months and charge the exporter a fee for the service. …

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