By Kim Tae-jong
Kookmin Financial Group said Wednesday it will not participate in the preliminary bidding for the acquisition of Woori Financial Group, which many believe will thwart the government’s attempt to privatize the state-funded group this year. It said that it will instead focus on the takeover of ING Group’s Korean operation.
The decision came at an emergency board meeting attended by 10 executive members, including KB Chairman Euh Yoon-dae, ahead of the bidding deadline set on Friday. KB has been regarded as the leading candidate to buy Woori since the government resumed the process to sell its 56.97 percent stake within this year.
Officials from Kookmin said most board directors expressed objection against the bidding due to growing opposition from politicians and union members of the two banks.
Park Geun-hye, the leading presidential hopeful of the ruling Saenuri Party, has said that the privatization of Woori should be discussed in the next government. The opposition United Democratic Party has also repeatedly said the hasty merger will only bring about chaos.
“It is obviously a heavy burden for us as the political parties have openly opposed our plan to take over Woori,” an official from Kookmin said.
The union members of both banks also threatened to take collective action such as a strike to express their opposition against the merger, in fear that it can result in restructuring leading to massive layoffs.
Initially, speculation was high for a potential merger of the two banks, especially after the chairmen of the two groups ― Lee Pal-seung of Woori and Euh Yoon-dae of Kookmin ― expressed a positive stance over the move.
Financial Services Commission Chairman Kim Seok-dong also pledged to complete the privatization of Woori within this year.
Kookmin’s withdrawal is raising speculation that the Woori sale would fall through again this year. The government’s previous attempts to sell Woori failed in 2010 and 2011 due to a lack of investor interest.
So far, three other potential bidders along with Kookmin have received an investment memorandum. They include Korean private equity fund MBK Partners and IMM Investment Management.
The Lee Myung-bak administration has pushed for the Woori sale in a bid to recoup the massive public fund injected into the company. The government injected 12.8 trillion won ($11.1 billion) of taxpayers' money into Woori Finance in a bid to rescue the company from near bankruptcy.