Woori Cruises Under Bahk; Test Awaits
By Na Jeong-ju
Staff Reporter
Ever since Bahk Byong-won replaced Hwang Young-key as the chairman of Woori Financial Group in late March, many had doubts as to whether or not the state-owned group would be able to secure market confidence on the road to full privatization.
However, after a mere 100 days since his inauguration, Woori stands on a solid ground with greater strength in the areas of credit and investment banking.
Most of all, the planned privatization of the country's largest financial services group by assets is making progress without major disturbances on the market.
His right-hand man, Park Hae-choon, president of Woori Bank, has also taken the group's most lucrative unit to a higher level based on his career at LG Card, the country's largest card firm. Now few people doubt that his goal of turning the lender into a strong competitor in the consumer financing sector will be realized soon.
Woori officials say Bahk, a former minister of finance and economy, has successfully laid the groundwork for the group's future growth.
``When Bahk and Park took office about three months ago, they pledged to strengthen non-banking businesses to provide consumers with comprehensive financial services,'' a Woori official said. ``Our credit card, insurance and invest banking businesses have become much stronger now because of their excellent strategies.''
Tough Days Ahead
According to Woori officials, more than 97 percent of the group's profits come from its banking business. The group seeks to grow non-banking capacities to produce more than 30 percent of profits from other businesses in the long term.
Woori has rapidly increased their share in consumer financing, but rising costs from business expansion and an increase in the number of employees will put Woori to the test.
Bahk and Park agreed with the union not to carry out any layoffs and ensure job security of all employees. In addition, it abolished discrimination against non-regular employees in salaries, benefits and other employment conditions early this year, causing a sharp increase in labor costs.
``Woori has enhanced efficiency continuously for the past decade through a series of restructuring programs,'' Park said. ``Based on our partnership with the union, we will actively find ways of developing the bank.''
Another key issue at Woori is the planned privatization of the group.
Last month, the state-run Korea Deposit Insurance Corp. (KDIC) sold 5 percent of its 78 percent stake in Woori to institutional investors. It wants to dispose of 23 percent more that is not tied to managerial rights by early 2008, and then find a strategic investor who can take over Woori.
The KDIC, a state-run deposit insurer, acquired its stake in Woori through an investment of 12 trillion won following the 1997-98 financial crisis.
Park earlier said he put the top priority of his duties on Woori's successful privatization to help the government recover its investment in the group. Together with Park, he is expected to push for the stake sale in close cooperation with KDIC.
``The KDIC can retrieve its investment in Woori any time, but should consider its impact on the market,'' a KDIC official said. ``We will consult closely with the management of Woori to complete the stake sale without causing shocks on the market.''