Posco President Lee Hee-geun and KB Kookmin Bank CEO Lee Hwan-ju, along with other officials from both companies, pose for a photo Thursday after signing an MOU for steel supply chain cooperation at Posco Center in Gangnam-gu, Seoul. From left: Lee Won-jong, head of KB Kookmin Bank's CIB sales group; Kim Hyeon-uk, head of KB Kookmin Bank's corporate customer group; Posco President Lee; KB Kookmin Bank CEO Lee; Kim Sang-cheol, head of Posco's marketing division; and Shin Seong-won, head of Posco's management planning division. [Posco]
Posco President Lee Hee-geun and KB Kookmin Bank CEO Lee Hwan-ju, along with other officials from both companies, pose for a photo Thursday after signing an MOU for steel supply chain cooperation at Posco Center in Gangnam-gu, Seoul. From left: Lee Won-jong, head of KB Kookmin Bank's CIB sales group; Kim Hyeon-uk, head of KB Kookmin Bank's corporate customer group; Posco President Lee; KB Kookmin Bank CEO Lee; Kim Sang-cheol, head of Posco's marketing division; and Shin Seong-won, head of Posco's management planning division. [Posco]

Posco is teaming up with KB Kookmin Bank to introduce a supply chain finance service for its steel customers, aiming to ease their funding burden and improve Posco's own accounts-receivable and collateral management amid a prolonged steel industry downturn.

Posco signed a supply chain finance MOU with KB Kookmin Bank on Thursday at Posco Center in Gangnam-gu, Seoul. Posco President Lee Hee-geun and KB Kookmin Bank CEO Lee Hwan-ju attended the signing ceremony along with other officials from both companies.

Supply chain finance is a financing mechanism that connects companies involved in production and distribution with financial institutions to support their cash flow. The arrangement provides financial support to customers that struggle to secure funding due to the time gap between delivery and payment collection, or a lack of collateral.

South Korea's steel industry has been under growing margin pressure as weakening demand, competition from low-cost products and rising energy costs converge. With Chinese oversupply and global trade risks persisting, managing liquidity has become a pressing challenge not only for steelmakers but also for their distribution and processing customers.

Under the MOU, Posco, its customers and KB Kookmin Bank will build a support framework linking transactions with financing. KB Kookmin Bank will handle sales proceeds collection and financial support, while customers will receive both financial and non-financial services, including corporate loans and ESG consulting.

Posco and KB Kookmin Bank will begin developing a system to integrate KB Kookmin Bank's loan program directly into "My Posco," Posco's integrated order and shipping platform, with the goal of launching the service before year-end. Once the system is in place, customers will be able to apply for and receive loans entirely within the platform, without going through separate procedures.

Customers will also receive preferential interest rates with reduced spreads. Posco expects the arrangement to help customers secure working capital and cut financing costs even as the steel market remains in a slump.

The deal also benefits Posco by improving transaction stability. Linking payment collection to the bank reduces the burden of managing accounts receivable and lowers transaction risk with customers. As customers' financial positions improve, the stability of steel product purchases and distribution is also expected to strengthen.

KB Kookmin Bank plans to build a finance model supporting the entire steel industry supply chain and generate business synergies by expanding linked financial services such as deposits and foreign exchange.

After completing the system build before year-end, Posco and KB Kookmin Bank plan to hold a joint briefing for customers covering the loan application process, interest rate benefits, ESG consulting and other detailed support programs.

"This agreement goes beyond simple financial cooperation — it is an important milestone that elevates Posco's unique mutual-growth model, in which we grow together with our customers, to the next level," Posco President Lee said. "I hope this collaboration will be remembered as the most exemplary case of mutual growth achieved through the partnership of South Korea's manufacturing and financial sectors."


kwater@heraldcorp.com