By Kang Seung-woo
Korea’s top financial regulator said multiple bidders including Korea Development Bank (KDB) Financial Group are looking to buy the state-controlled Woori Financial Group.
“KDB Financial is one candidate that wants to acquire Woori Financial,” Financial Services Commission (FSC) Chairman Kim Seok-dong said in a forum held in Seoul, Tuesday night. “There is more than one valid bidder in the Woori auction.”
Kim didn’t name potential bidders, other than KDB, or reveal how many there are.
His remarks came after the Public Fund Oversight Committee (PFOC) announced a road map for the sale of Woori, restarting the stalled privatization of the nation’s largest banking group.
KDB Chairman Kang Man-soo has been a strong supporter of a “mega-bank” by merging Woori, the nation’s largest financial services provider by assets.
“We have felt embarrassed by reports portraying KDB as good as winning the deal,” he said. KDB’s potential acquisition of Woori is seen as the government’s move to backpedal from its promise to privatize Woori since KDB itself is also under state control.
“As KDB bids for Woori, it can’t avoid scrutiny because of its status as a state bank,” Kim said.
Observers say that Kim is trying to lure more bidders for Woori in order to deflect criticism over the possible combination of two state banks and to obtain the best price for the banking group.
“Although others such as KB Financial and Shinhan Financial have kept quiet on the Woori acquisition, Kim’s remarks might play a role in clearing ways for them to join the race,” said a Seoul-based analyst.
The KDB chairman has said that a merger between KDB and Woori would create an internationally competitive mega-bank.
KDB’s takeover of Woori Financial would make the consolidated entity the biggest local financial group by far with combined assets of about 500 trillion won. KB Financial’s assets stand at 344 trillion won, and Shinhan Financial holds 328.6 trillion won.
“Is it possible for the acquisition to end up creating a mega-bank? KDB runs only 70 branches,” he said.
“As far as I know, KDB has hoped of creating a mega-bank for a long time. The mega-bank plan is not the idea of the financial authorities. “KDB has to go private.”
In the wake of the Asian financial crisis, the government in 1998 spent 12.8 trillion won in taxpayers’ money to bail out Woori Bank and several financial companies that later merged to become the first financial holding company in Korea in April 2001.
In a bid to hand over Woori Financial to private hands, the PFOC put the banking group up for sale last year, but in December, it suspended its move for the sale of a 56.97 percent stake in Woori Financial, held by the Korea Deposit Insurance Corp. (KDIC) due to the absence of a valid bidder.