By Lee Hyo-sik
The government has decided not to dispose of its remaining 18.5 percent stake in Woori Bank this year as Korea's third-largest commercial bank has been reeling from an unprecedented hiring scandal.
Financial regulators had initially planned to complete the privatization of the bank by the end of the year, but had to delay the schedule after Woori CEO Lee Kwang-goo stepped down Nov. 2 amid the alleged illicit hiring of the children of government officials as its employees.
Instead, they will attempt to sell a 7 percent stake, or 47.32 million shares, in the bank next year, according to the government's 2018 budget proposal submitted to the National Assembly, Sunday.
In the proposal, the Korea Deposit Insurance Corp. (KDIC), which holds the 18.5 percent stake in Woori, said it plans to raise about 500 billion won ($446 million) by unloading the 7 percent stake next year. But it did not say what they would do with the remaining 11.5 percent stake.
In November 2016, the state deposit insurer unloaded a 29.7 percent stake in the bank to seven strategic and financial investors, including IMM Private Equity and Mirae Asset Global Investments.
KDIC is also expected to sell the 7 percent stake next year to multiple institutional investors in block deals.
The government has tried to privatize Woori Bank since 2001 as it sought to retrieve its investment in the bank. It injected about 12.8 trillion won into the bank in the aftermath of the Asian financial crisis in 1997.
"It has become difficult to dispose of Woori shares this year because of the unexpected event," said Park Kyung-seo, co-chairman of the Public Fund Oversight Committee (PFOC), a government body overseeing the management of financial institutions that received taxpayers' money.
Park, who is also a professor in business administration at Korea University, cited Woori Chairman Lee's abrupt resignation as an unforeseen obstacle to the committee's initial plan to sell the 18.7 percent stake.
Following the allegations of illicit hiring, the bank has been raided by prosecutors twice. It is alleged that Woori hired more than a dozen people who were either children or relatives of officials from the Financial Supervisory Service and the National Intelligence Service. The former is the country's financial regulator while the latter is its spy agency.
"The bank should hold a board of directors meeting and a shareholders meeting soon to elect a new CEO," Park said. "We will consider various options as to how we will unload the 7 percent stake to raise as much money as possible."
A PFOC official said the committee will decide exactly how many shares it will sell by considering market conditions at the time. "As soon as Woori Bank normalizes its operations, the committee will take the necessary steps for the stake sale."
The government has decided not to dispose of its remaining 18.5 percent stake in Woori Bank this year as Korea's third-largest commercial bank has been reeling from an unprecedented hiring scandal.
Financial regulators had initially planned to complete the privatization of the bank by the end of the year, but had to delay the schedule after Woori CEO Lee Kwang-goo stepped down Nov. 2 amid the alleged illicit hiring of the children of government officials as its employees.
Instead, they will attempt to sell a 7 percent stake, or 47.32 million shares, in the bank next year, according to the government's 2018 budget proposal submitted to the National Assembly, Sunday.
In the proposal, the Korea Deposit Insurance Corp. (KDIC), which holds the 18.5 percent stake in Woori, said it plans to raise about 500 billion won ($446 million) by unloading the 7 percent stake next year. But it did not say what they would do with the remaining 11.5 percent stake.
In November 2016, the state deposit insurer unloaded a 29.7 percent stake in the bank to seven strategic and financial investors, including IMM Private Equity and Mirae Asset Global Investments.
KDIC is also expected to sell the 7 percent stake next year to multiple institutional investors in block deals.
The government has tried to privatize Woori Bank since 2001 as it sought to retrieve its investment in the bank. It injected about 12.8 trillion won into the bank in the aftermath of the Asian financial crisis in 1997.
"It has become difficult to dispose of Woori shares this year because of the unexpected event," said Park Kyung-seo, co-chairman of the Public Fund Oversight Committee (PFOC), a government body overseeing the management of financial institutions that received taxpayers' money.
Park, who is also a professor in business administration at Korea University, cited Woori Chairman Lee's abrupt resignation as an unforeseen obstacle to the committee's initial plan to sell the 18.7 percent stake.
Following the allegations of illicit hiring, the bank has been raided by prosecutors twice. It is alleged that Woori hired more than a dozen people who were either children or relatives of officials from the Financial Supervisory Service and the National Intelligence Service. The former is the country's financial regulator while the latter is its spy agency.
"The bank should hold a board of directors meeting and a shareholders meeting soon to elect a new CEO," Park said. "We will consider various options as to how we will unload the 7 percent stake to raise as much money as possible."
A PFOC official said the committee will decide exactly how many shares it will sell by considering market conditions at the time. "As soon as Woori Bank normalizes its operations, the committee will take the necessary steps for the stake sale."
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