BEIJING // As funding from European banks dries up, Gulf financial institutions are partnering South Korea to keep development projects alive.
The National Bank of Abu Dhabi has joined a series of other Gulf financial institutions in signing an agreement with the Export-Import Bank of Korea to support projects in the region involving South Korean companies.
Officials from the South Korean lender, also known as Korea EximBank, said the initiative would promote co-financing for infrastructure developments and other schemes, filling a gap as finance from European banks tightens as a result of the euro-zone financial crisis.
"We're trying to promote cooperation among these banks in order to support the Korean companies having some business in the Middle East area," said Han Jong-soo, the deputy director of the investment banking office of Korea EximBank. "It's based on the co-financing for the projects where Korean companies are involved in the Middle East countries.
"Most of the projects in the Middle East countries are large scale so we need to cooperate so we can provide more capital," he said.
The other Gulf banks involved are the National Bank of Kuwait, Al Ahli Bank of Kuwait, the Commercial Bank of Kuwait, Qatar National Bank and Qatar Islamic Bank.
Financing from European banks had become more difficult to obtain, Mr Han said, so "in that case we need to cooperate with the banks in the Middle East with some liquidity".
Mr Han said the memorandum of understanding agreement would also promote information sharing and could lead to staff exchanges between the banks.
Active in Middle East construction since the 1970s, South Korean companies have secured many high-value and often complex infrastructure and other contracts in Gulf countries.
Samsung has won contracts totalling tens of billions of dirhams in the UAE's property and oil and gas sectors.
For South Korean companies the Middle East is, said Mr Han, "a huge market".
"These are the countries, the UAE, Kuwait and Qatar, with a lot of projects going on. "So having some good relationships with the banks in these countries is really helpful for the Korean companies," he said.
One of the highest-profile UAE projects involving South Korean interests is the contract, awarded in December 2009, for a consortium led by Korea Electric Power Corporation to develop four nuclear power reactors in Abu Dhabi.
In the wake of this agreement, South Korea and the UAE have strengthened defence cooperation, with Seoul providing elite military personnel to train their Emirati counterparts.