KPI and KSF of a Credit Guarantee Institution

--Case in Taiwan
by
Yun-sen Jiang
Head of Client Services Dept., Taiwan SMEG

28th ACSIC Conference

Bali, Indonesia
Nov.18, 2015
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 Outline
Ø Background
Ø Operations of Credit Guarantee
Ø Public Relations
Ø KPI of CG and KSF of a CGI

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2 Taiwan SMEG
 Background
l  Establishment: July 9, 1974
l  Nature: Non-profit organization under supervision
of Ministry of Economic Affairs
l  Sourcesof Capital Funds: Donations from government,
banks and other agencies
l  Leverage: Up to 20 times net worth
l  Employees: 326
l  Contracted Banks: 40, with more than 3,000 branches

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3 Taiwan SMEG
 Granting Credit Guarantee(1/3)
l Apply to Banks (Indirect Guar.)

Banks Taiwan
SMEs SMEG

-Extend guarantees to SMEs via 40 contracted banks

with more than 3,000 branches
-Documents channeled via internet

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4 Taiwan SMEG
 Granting Credit Guarantee(2/3)

l Apply to Taiwan SMEG (Direct Guar.)

Taiwan Taiwan
SMEs SMEG SMEs Banks SMEG

-Based on the government industrial policies to

enhance development of core industries
-Focus on SMEs with intellectual property or engaging
in cultural and creative industries

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5 Taiwan SMEG
 Granting Credit Guarantee(3/3)
l The Counterpart Guarantee

Donating Taiwan
SMEs agencies Banks SMEG

Risk Sharing of Donating Agencies/Taiwan SMEG

-3 big enterprises/Taiwan SMEG: 50%/50%
-5 central government agencies/Taiwan SMEG: 50%/50%
-6 big city governments/Taiwan SMEG: 40%/60%
-7 county governments/Taiwan SMEG: 30%/70%

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6 Taiwan SMEG
 Coverage and Fee-rate

l  Coverage ratio:
Average around 80% for SMEs
90% to 95% for micro business and start-ups

l  Guarantee fee rate:

Average 0.75% for SMEs
Fixed 0.5% for micro business and start-ups

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7 Taiwan SMEG
 Weather the Impact of Financial Crisis(1/2)
（Nov. 2008~ Dec. 2015)

For SME Loans:

l  Coverage Ratio: 70% to 80%
l  Ceiling guaranteed loan amount for an enterprise:
NT$100 million to NT$120 million
l  Additional guaranteed loans for domestic investment:
NT$100 million
l  Additional guaranteed loans secured by public
construction contract: NT$30 million(2015.1.1.~2015.12.31.)
l  Guarantee fee rate: 0.75% to 0.50%

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8 Taiwan SMEG
 Weather the Impact of Financial Crisis(2/2)
（Nov. 2009~ Dec. 2014)

For Non-SME Loans:

l  Ceiling guaranteed loans
Working capital: NT$60 million
Capital expenditure: NT$200 million
l  Coverage ratio: Max. 70%
l  Guarantee fee: 0.75%

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9 Taiwan SMEG
 Guar./Loans (2009~2014)
Unit:
NT$ billion Guar. Loans Default
1,800
1,600 1,426
1,400 1,312

1,200 1,143 1,140

1,012 1,056
1,000 864 911 ※80%
808 ※80%
※80%
800 693 ※80%
631
※80%
600 475
※75%
400
200
8.1 5.6 7.1 8.5 10.9 10.3
0
2009 2010 2011 2012 2013 2014

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10 Taiwan SMEG
 Public Relations

l  Website of Taiwan SMEG

l  CG Workshops for Banks’ Lending Staff

l  SMEG E-Monthly Newsletter

l  SMEG Torchbearer Institute (TI)

l  TI E-Newsletter

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11 Taiwan SMEG
 Website of Taiwan SMEG

http://www.smeg.org.tw/index_english.htm

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12 Taiwan SMEG
 CG Workshops for Banks’ Staff
From Jan. 1, 2014 to Dec. 31, 2014
l  Workshops: 84
l  Total participants: 6,537

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13 Taiwan SMEG
 SMEG Torchbearer Institute (TI)
From its inception in July 2005 to Dec. 2014
l  Forum: 22; Lecture: 88; Course: 79
l  Total participants: 19,464

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14 Taiwan SMEG
 KPI of CG

l  Guar. amount
l  No. of guar. enterprises
l  NPG amount
l  Recoveries of CG claim payment

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15 Taiwan SMEG
 KSF of a CGI

l  Government

l  Credit Guarantee Institution (CGI)

l  Banks

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16 Taiwan SMEG
 Government

l  Comprehensive SME development policy

l  Laws and regulations on credit guarantee and

banking industry

l  Integrated SME assistance system

l  Budget to fund the CGI

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17 Taiwan SMEG
 Banks

l  Well-trained and experienced lending officers

l  Sound credit appraisal and risk management
system
l  Efficient credit information exchange system
among banks
l  Specific bank/department for SME-lending
l  Donations to CGI

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18 Taiwan SMEG
 CGI
l  Well-designed procedures for dealing with credit
guarantee applications
l  Clear criteria for handling claims
l  Adequate design of follow-up and risk
management measures
l  Efficient communication mechanism with banks
l  Frequent interactions with SMEs and start-ups

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19 Taiwan SMEG
 Taiwan SMEG Bridges Government,
Banks and SMEs

Government

Taiwan
SMEG
Banks SMEs

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20 Taiwan SMEG
 Thank You!

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21 Taiwan SMEG