Can KB's new chief swallow Woori?

By Na Jeong-ju

KB Financial Group will go after Woori Financial, reviving the old-school idea of creating a mega bank by a merger or acquisition.

The first battle cry was uttered Thursday by Lim Young-rok, who has been tapped to succeed the outgoing KB Chairman Euh Yoon-dae.

Lim has plenty of support from Financial Services Commission Chairman Shin Je-yoon, who had repeatedly indicated his preference for Lim ahead of the KB chairman selection committee meeting.

Lim and Shin are from Seoul National University — Lim with a bachelors in Korean literature and Shin in economics. But the two worked for the powerful finance ministry.

Shin also expressed his wish to pick up where Kang Man-soo, the first finance minister under President Lee Myung-bak, left off to press on with the creation of a bank big enough to be on par with global institutions.

The Shin-Lim alliance, if it comes to that, wouldnt mean that Wooris newly-selected chairman, Lee Soon-woo, will let them get their way.

It wont be a surprise to see Lee upset now that Lim is acting as if he was not counted. Lee is the first person who started as teller and became head of a major banking group, and is considered a living legend in the industry.

Lim finished his bureaucratic career as vice finance minister.

Lim as well as all other candidates received questions about what they will do about Woori, if it is for sale. Lim said he is ready to compete to buy it, a source from KB said Thursday.

A majority of board members also think theres no reason not to participate in the bidding because many market watchers already consider KB as the strongest potential contender. What matters is how to finance the deal.

The FSC is expected to announce a plan this month to auction off Woori, which had 325 trillion won in assets as of the end of 2012. FSC Chairman Shin has repeatedly vowed to complete the deal by the end of next year.

"We are still trying to find the best possible option to maximize profits from the Woori sale," an FSC official said, asking not to be named. "We dont prefer any specific bidders. Woori will be sold to a bidder that offers the highest price. The competition will be fair."

KB is known to have greater cash reserves than any other potential Korean bidders.

Hana Financial Group, which was tipped as a potential bidder for Woori, doesnt have the wherewithal to participate in the bidding because it already acquired Korea Exchange Bank last year. Shinhan Financial Group, controlled by Korean-Japanese shareholders, has never shown any interest in buying Woori.

One option discussed was to merge Woori and KDB, another state-owned lender, to set up an investment agency similar to Singapores Temasek. However, the FSC is now pushing for the combination of KDB and the Korea Finance Corp. to expand the governments corporate financing functions.

There have been media reports that the government may sell two provincial banks owned by Woori — Gyongnam and Gwangju — first before putting the flagship bank up for auction. Keen attention is also being paid to whether its brokerage unit, Woori Investment and Securities, will be sold separately.