Woori privatization likely to back in limbo

By Kim Bo-eun

Woori Financial Group's headquarters in central Seoul / Korea Times file

The government is facing a bumpy road ahead in its attempt to fully privatize Woori Financial Holdings due to its lackluster stock price amid the growing market volatility triggered by the COVID-19 pandemic.

The financial authorities unveiled specifics of the plan to privatize Woori last year. The Korea Deposit Insurance Corp. (KDIC) currently holds ownership of the banking group, as government funds were spent in 1997 to save Woori Bank during the Asian Financial Crisis.

The Financial Services Commission (FSC) stated last year it would push for the KDIC to sell its 17.25 percent stake in the financial holding company over a period of three years beginning in 2020. Other shareholders include the National Pension Service (8.37 percent), the employee stock ownership association (6.39 percent) and IMM Private Equity (5.98 percent).

The plan had been to proceed with the sell-off beginning in the first half of this year. However, the authorities have been unable to push forward with the plan, as Woori's stock price has continued to fall since February 2019.

Woori's stock price hit a low of on March 20 at 6,320 won amid the stock market plunge triggered by the COVID-19 pandemic. It has risen since, but remains below 10,000 won closing at 9,220 won Thursday.

While the Public Funds Management Committee (PFMC) and KDIC have stated they have not set a level the price needs to reach to be able to consider the sell-off, this is estimated to be around 12,000 won.

The figure is based on calculations of the funds injected into Woori Bank at the time of the financial crisis. Of the 12.8 trillion won in funds pumped into the bank, 11 trillion won has been retrieved.

According to calculations, Woori's price per share needs to be 12,350 won for the government to be able to retrieve the remaining amount at 1997 prices.

The PFMC will hold a meeting Monday to discuss steps to be taken. The committee is the entity that makes the decision on when Woori's shares will be sold.

"The stock price matters but it is not the only factor we consider," an official of the committee said. "The plan will be discussed at the meeting next week."

“Regulations on the sell-off of Woori state that this should be done as quickly as possible, while enabling the retrieval of public funds, and contributing to the development of the finance industry,” a KDIC official said.

“We plan to discuss developments with the committee members and lay out possible measures that could be taken in the latter half of the year.”

Woori Financial Group's Chairman Son Tae-seung bought back shares in an attempt to boost the stock price but this has had little effect. Son bought a total of 15,000 shares this year.

Woori Financial logged 518.2 billion won in net profit in the first quarter of this year, down 8.9 percent from a year ago.