FSC pushes for 'package' sale of Woori units
By Na Jeong-ju
Shin Je-yoon FSC Chairman
The government is expected to sell Woori Financial Group’s flagship banking unit and non-core affiliates altogether in an effort to maximize profits from the privatization.
How the state-owned firm will be sold is the No. 1 financial issue here as the auction will reshape the landscape of the country’s banking, brokerage, credit card and insurance industries.
Sources said Thursday the Financial Services Commission (FSC) has opted to sell the holding firm’s affiliates in package, except for two smaller provincial lenders ― Kyongnam and Kwangju ― instead of selling them separately. Details of the privatization plan will be announced next week.
Financial players have showed more interest in Woori’s non-banking units ― Woori Investment and Securities, Woori Aviva Life Insurance and Woori Card ― than in Woori Bank.
“Selling the affiliates apiece could take a long period of time ― and is complicated. Such an idea is not preferred by government officials,” a source said.
FSC officials declined to comment on how they will privatize Woori, only saying that drawing up the plan is now in the final stage.
FSC Chairman Shin Je-yoon earlier suggested that Korea needs to have a “mega” bank. In a recent policy briefing session at the National Assembly, he said he doesn’t totally agree with the theory, but it is one alternative he is considering in pushing for the Woori sale, to spur the development of the financial sector.
KB Financial Group, Korea’s fourth largest financial firm, is now considered as the strongest contender with some private equity funds being rumored to have an interest in joining any bid. As of the end of 2012, KB had 282 trillion won in assets, compared to Woori’s 325 trillion won.
Speculation has been mounting that the FSC may push for the merger of Woori and KB.
The FSC said it will auction off Woori by the end of next year.
“The top priority of the privatization is maximizing profits,” an FSC official said, asking not to be named. “We don’t prefer any specific bidders. Woori will be sold to the bidder that offers the highest price. That’s the bottom line.”
The sale of Woori has been a pressing government concern for years. It has attempted to auction it off three times since 2010, but has failed to do so largely because the firm was “too big” to sell. Shin’s predecessor, Kim Seok-dong, preferred a “block deal,” under which a single investor would take over all the group’s assets. There have been media reports that the FSC, this time, may sell the two provincial banks first before putting other affiliates up for auction.
The government currently holds a 56.97 percent stake in Woori after it injected 12.7 trillion won of taxpayers’ money into the group in the wake of the 1997-98 financial crisis.
One major headache for the FSC is that Woori’s stocks are largely undervalued, and the local stock market is now undergoing a correction. Some analysts say that makes it difficult for the government to maximize profits from the sale.