A multi million dollar agreement featuring letters of credit (L/Cs) between Korea's export credit agency and a Russian bank signifies a new start for trade between two old trading partners.

Transactions between the two countries dwindled in the wake of the Russian debt crisis in the late 1990s. But the new head of the Export-Import Bank of Korea (Eximbank Korea) seems determine to drum up new business between the two countries.

Confirmation and refinancing

Vneshtorgbank (VTB) and Eximbank Korea this month signed a US$30 million credit agreement. Under the second agreement of its kind, the South Korean bank will extend a credit line for financing VTB customers who import South Korean goods. The agreement envisages carrying out operations on confirming and refinancing L/Cs and issuing guarantees for South Korean exporters and commercial Banks.

Debt rescheduling

Negotiators seeking a formula for rescheduling the former Soviet Union's debt to Korea reached a tentative agreement in June 2003. Eximbank Korea subsequently responded by reopening for Russian business.

Initially the bank contracted with four commercial banks in Russia. Subsequently Eximbank approved a US$30 million relending facility to Rosbank.

New broom

The new facilities for Russia seem to be the inspiration of Eximbank Korea's newly appointed chairman, Shin Dong-kyu. Immediately after being named head of the government-run bank on 4 September 2003 Shin visited Moscow and announced that the bank will actively support domestic companies that win large projects in Russia. "There is little chance that Russia will not pay its debts," Mr. Shin said. "The country has more than US$60 billion in foreign reserves thanks to increased oil exports," he said.

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