By Na Jeong-ju
Woori Financial Group is set to go up for sale.
The Financial Services Commission (FSC) announced a detailed plan Wednesday to privatize the state-owned firm with 325 trillion won ($282 billion) in assets.
The holding firm’s 14 affiliates have been divided into three groups — each will be auctioned off separately.
The first group is Woori’s two provincial banks — Kyongnam and Kwangju.
Its brokerage unit, Woori Investment and Securities, and consumer financing, insurance and asset management affiliates are in the second group.
The third group is made up of Woori’s flagship banking unit, Woori Bank, credit card affiliate and a research institute. The bank’s assets total 266 trillion won, accounting for about 75 percent of the holding firm’s total assets.
The auction for first and second groups will start in July and August, respectively. The third group will be put up for sale early next year after finding buyers for the first and second groups. The FSC is seeking to complete the privatization by the end of next year.
Announcing these plans, FSC Chairman Shin Je-yoon said the sale will provide a crucial opportunity to develop the country’s financial sector.
“The top priority is to enhance the overall competitiveness of financial firms. At the same time, we will try to maximize profits from the sale because that’s a matter of taxpayers’ money,” Shin told reporters.
He stressed that the government will provide equal opportunities to foreign bidders. “There will be no discrimination against foreign investors. All bidders — domestic or foreign — will be treated equally,” he said.
The privatization will reshape the landscape of the financial industry because Woori’s core units are already major market players.
Financial players have showed more interest in Woori’s non-banking units than in Woori Bank because they already have their own strong retail banking networks. KB Financial Group is known to be interested in buying Woori Investment and Securities. Sources say Shinhan Financial could join the bidding to strengthen its non-banking business. HSBC, Standard Chartered are also among potential bidders.
News reports say some private equity funds are interested in buying the non-banking units.
This is the government’s fourth attempt since 2010 to recoup massive amounts of taxpayers’ money, which were injected to save the firm in the aftermath of the 1997-98 Asian financial crisis. However, it couldn’t succeed 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.
“We decided to sell Woori’s banking and non-banking units separately to meet the needs of market players and complete the privatization as quickly as possible,” Shin said.
The government currently holds a 57 percent stake in Woori.