April 20, 2024

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[THE INVESTOR] The Financial Services Commission announced on Nov. 13 it would sell a total of 29.7 percent government stake in Woori bank to seven bidders, ending sixteen-years of efforts to privatize the state-funded lender.

Yoon Chang-hyun, head of the Public Funds Oversight Committee (left) confirms the decision to sell a 29.7 percent government stake in Woori Bank to seven financial institutions at a committee meeting at the Seoul government complex in Gwanghwamun, Seoul, Nov. 13. (FSC)

The seven chosen buyers are: Tong Yang Life Insurance, Mirae Asset Global Investments, Eugene Asset Management, Kiwoom Securities, Korea Investment & Securities, Hanwha Life Insurance and IMM Private Equity.

IMM PE has won the largest share of 6 percent among the buyers. Tong Yang took 4 percent, while Mirae Asset was offered 3.7 percent. The rest got 4 percent each.

The stake sale will bring in about 2.4 trillion won for the government. 

Korea Deposit Insurance Corp., currently the largest shareholder of Woori Bank with a 51.06 percent stake, will sell the remaining 21.4 percent of the bank stake later after seeking upside gains.

The Korean government established Woori Bank by merging five struggling banks in 1998 in the wake of the Asian financial crisis, at a total cost of 12.8 trillion won ($11.36 billion). If the sale is completed successfully, the government will have recovered 10.6 trillion won in total.  

“Today marks a meaningful day as we put an end to such a tough journey to return Woori Bank to the private market,” said FSC Chairman Yim Jong-yong at a meeting with the Public Funds Oversight Committee on Sunday. “If the bank’s market value continues to rise, the government will be able to bring back all of the taxpayers’ money in the near term.” 

Yim added the government will try to sell the rest of the KDIC stake as early as possible.

It was the government’s fifth attempt to privatize the bank since 2010. The regulator had previously wanted to sell a 30 percent stake to a single buyer with managerial rights, but there was none willing to take on the risk of acquiring the bank.

In the fifth attempt, the FSC and the committee decided to sell a total stake of 30 percent after splitting it into 4 to 8 percent chunks. The KDIC intends to sell 48.09 percent of the bank in total, retaining 2.97 percent to be used for call options for minor stakeholders that were selected last year.

There were a handful of foreign financial institutions and private equity funds that had shown interest in buying the Woori stake, but they dropped out in the end.

“I guess the US presidential election was quite a big factor for them to change their decisions,” said Yoon Chang-hyun, head of the committee.

Tong Yang’s win captures market attention since its owner is China’s Anbang Insurnace Group, which intends to expand its presence in the Korean financial market.

A total of 18 domestic and foreign investors applied for preliminary bidding for the bank stake in October. Eight out of the 18 stayed in the main bidding held on Friday. The FSC singled out one of the bidders for reasons that the regulator declined to comment. 

The seven buyers will pay and complete the acquisition process by mid-December. The FSC aims to close the process by Dec. 14. The memorandum of understanding signed between the KDIC and Woori Bank for co-management of the bank in 2000 will be nullified as soon as the buying process ends.

Five of the seven buyers -- Tong Yang, Kiwoom, Korea Investment & Securities, Hanwha and IMM PE – have shown interest in recommending an outside director for the bank’s board. Recommended candidates will be nominated at a temporary board meeting on Dec. 30.

By Song Su-hyun/ The Korea Herald (song@heraldcorp.com)