By Kim Tong-hyung

The last time the Korean government sold a local bank to a foreign investor it popped open a can of worms the size of tree trunks.

Red-faced critics and politicians went ad nauseam about the allegedly murky connections between corrupt financial regulators and ``meoktwi’’ (eating and fleeing) foreign capital reaping massive profit from once-distressed Korean assets.

Banking unions packed their schedules with protests and strikes, while a slew of bureaucrats and businessmen were arrested, tried and jailed for a complicated web of reasons nobody seemed able to explain in clear-cut language. Then there were those who raised concerns that the whole experience was doubling as a horror show to other outside investors and discouraging them from buying in.

The decade of circular arguments and political debacle over Texas-based Lone Star Funds and its 2003 purchase of the Korea Exchange Bank (KEB), which was sold to Hana Financial earlier this year, have financial authorities weathered like an old newspaper.

So it’s unfathomable to think that regulators will take a similar route and give foreigners a real shot at snatching up an even bigger Korean banking group in Woori Financial. Or is it?

Kim Seok-dong, chief of the Financial Services Commission (FSC), triggered a media frenzy Wednesday after he told a forum in Seoul that the government will hold an international auction for the nation’s largest financial company by assets. Local and foreign investors’ bids will be treated equally, he said.

FSC said earlier this month it will make a third attempt to sell Woori, which was rescued by taxpayers after the late-1990s Asian financial crisis. Previous attempts to sell Woori failed due to the lack of buyer interest in 2010 and last year.

It was unclear whether Kim’s words could be taken as a sign that government officials were ready to risk the possibility of another Lone Star-KEB saga. An FSC spokesman was downplaying his comments in a telephone conversation hours later.

``All Kim did was offer the simple, dry facts. Our previous attempts to sell Woori were through international auctions as well, so foreign investors have never technically been excluded. And under Korean law, foreign investors are required to be treated equally with Korean investors in such an environment,’’ he said.

``Nothing has changed about our stance on Woori, but it seemed some media outlets took up and ran with Kim’s comments.’’
Apparently, government officials would prefer Woori to be taken over by Korean companies or investors. The most ideal suitor would be one of rest of the ``big four’’ financial holding companies ― KB, Hana or Shinhan.

Well, good luck with that. Hana has no room to swallow another industry rival after it barely digested KEB. And Shinhan has shown no interest in expansion that isn’t organic. So all eyes are on KB, but the company’s Chairman Euh Yoon-dae keeps denying having any interest in Woori.

The options are clearly limited, but government officials aren’t ready to admit defeat in their attempts to privatize Woori and recoup the massive amount of public funds spent to rescue it. It bears further watching whether foreign investors will come in play eventually as regulators become desperate.

A high-ranked Woori official said it would be a massive mistake to let a foreigner absorb the banking group.
``Who knows if we will go through the whole Lone Star thing again?’’ he said.

``Woori is one of the country’s biggest banking groups and a force in corporate banking. Think about all the information it handles on Korean companies that continue to support the country’s export machine. Selling this company to a foreign investor will definitely be a national loss.’’