Credit Administrative Work 1

1. Items to be verified in credit handling (1) Why we need credit consultation?(2) Basic items to be verified in credit consultation

2. Procedures of credit handling (1) Counseling with client(2) Credit rating(3) Pre-consultation(4) Application for approval(5) Credit evaluation(6) Receiving loan documents and fulfillment of approval conditions(7) Approval confirmation(8) Loan disbursement(9) Preservation of loan documents(10) Loan administrations

2

1. Items to be verified in credit handling

(1) Why we need credit consultation?

[Debtor]- Industry- Business type- Business environment

Diversification of Credit Conditions

Propose Appropriate Conditions

SuccessfulCredit Consultation

(2) Basic items to be verified in credit consultation

1) Confirmation on debtor’s entity

Legal capacity

Appropriateness in Exercising Right of Representation

2) Use of Fund, Loan Amount, Loan Period

Appropriateness in use of fund

Loan with unclear fund use

Ex. Construction of factory, introduction of new machineries, purchase of raw material, 1 cycle working capital financing, etc.

No credit approval (by Credit Approval Division in Head Office)Possible insolvency

Confirmation on management or employeeholding right of representation

Confirmation on debtor(corporation)’s legal capacity

3) Identify available credit amount

Sales & assets volumeScale of New Investment

Excessive Expenditure Compared to Scale Concerns for Reckless Management,

Risk for Lack of Repayment Capability

Review on the appropriateness in credit amount

Loan for Working Capital

Loan for CAPEX

Prepare and review on working capital limit calculation table

Prepare and review on CAPEX financingcalculation table

Requesting Loan for New Business based on

Projected Financial Statements

Additional review on Business Plan

3

4) Identification of Current Status of Industry

Current Status of Industry which Debtor Belongs to

Growing Industry Put priority on technology and finding buyerahead of obligor’s financial position

Items requiring careful verificationJudgment on available range of credit extension

Declining Industry

Items to be considered in identification of Current

Status of Industry

Adequate reduction of exposureregardless of stable financial structure

Economical status of industry in the country

Government Policy

Market Demand (Growth Potential)

Competition Intensity

Life Cycle

Difficulty in Entering & Exiting, etc.

※ Matters requiring attention in applying for credit approval to Credit Approval Division(Overseas Loan Team)

Loan officer of Overseas Loan Team may be short on information about a certain industry in a country.

Times to be taken in credit approval may be shortened by providing current status and prospect of industry.

5) Single Borrower, TELIT

Single Borrower

Review on the status of parent company

Most of corporations doing business with overseas branch & corporation of KEB have their headquarters in Korea

Affiliated entities who can significantly influence one another having close relationship though they are separate corporate entities and individuals

Application Standard for Discretionary Powers

Interest Pricing

Calculation based on single borrower

Confirmation on credit rating of parent company

Importance in Grasping Loan Policy of Loan Review Department

of Korea HeadquarterFuture credit operation policy

What is TELIT?Consultation about the possible use of TELIT after consulting with SRM or RM in charge of parent company in Korea

4

6) Selection of appropriate loan approval authority

Application of appropriate loan approval authority is possible only after completion of credit rating since approval authoritymay differ according to loan amount and credit rating.

•Total Credit Limit = Total Credit- Credit Excluding Single Borrower Limit•Net Unsecured Credit Limit = (Total Credit- Credit Excluding Single Borrower Limit) x Credit Risk Weight – Realization Value of Collateral

Completion of Credit Rating before Loan Application

Error in Application of Loan Approval Authority

Risk for severe problem including the excessive loan with violation of approval authority

Application Criteria of Loan Approval Authority

Determination of ApprovalAuthority

Subject to Headquarter

7) Security Interest

Review on debtor’s debt serviceability

Review on providing collateral, additional guarantor,and obtaining LOC

Simultaneous review on management status, operation results, and debt serviceability, and obtaining guarantee fromparent company, if deemed possible

Review on debt serviceability

Security interest measures

Understanding of current statusand guarantee from parent company

8) Analysis on Profitability

Grasping Risk Scale Risk Hedge + pursue additional appropriate profit

Loan officer’s Committee•Chairman (Head of Overseas Loan Team) •3 voting members (loan officers) •On demands

Senior Loan officer’s Committee•Chairman (Head of Credit Approval Division)•3 voting members (Head of Team)•On demands

Loan Committee•Chairman (Deputy President (CCO))•Voting members (Head of Loan Div, Head of Marketing Support Dept)•Twice a Week

5

1) Counseling with Client• Great opportunity to grasp the matters to be confirmed in loan handling• Take memo in great details by carefully listening to remarks of client, Use it in credit rating• Available through various routes including on-site visit to obligor, obligor’s visit to Bank, phone, etc.

2) Credit Rating

In case of obligor’s rejection to submit document before loan handling: Search internet data, refer to evaluation data of other credit rating agencies. Request for prior consultation to Credit Approval Division in H/O, and receive formal documents after getting approval

“Credit rating is an important element in measuring the scale of approval authority and credit risk quantity”

Report on CounselingDetermination onLoan promotion

Credit Rating

Prior obtainment of Documents for Credit Rating

3) Prior consultation •For the loan to be approved by headquarter, after completion of credit rating → Request for prior consultation to loan officers

4) Request for Approval

5) Credit evaluation and approval•Credit evaluation and approval by loan officer of H/O

Approval of Prior

consultation

Request for receiving additional documents

Request for Formal Approval

6)Request for Loan Documents & Fulfillment of Approval Conditions

7) Confirmation on Approval

8) Loan Record

Completion of credit

evaluation & Approval

Confirmation on

Approval Conditions

Request for Loan

Documents

•Approval ledger is created after confirmation on approval

•When confirming approval based on withdrawal request of client for loan, create Loan record with sequence of approval no.

9) Safekeeping of Loan Documents

10) Follow-Up Services

•Loan Documents: Documentation from Counseling, Execution, Follow-Up Services to Final Collection •Personnel in charge of loan examines based on check list and chief of branch examines once gain with check list.

•All behavior from loan handling to repayment

2. Procedures of Loan Handling

1 Counseling with Client

2 Credit Rating3 Prior consultation

4 Request for Approval

5 Credit evaluation

6 Request for Loan Documents & Fulfillment

of Approval Conditions

7 Confirmation on Approval 8 Loan Disbursement

9 Safekeeping of Loan Documents

10 Loan administration