Ailing Banks Need New Restructure Deal

Woori Finance Holding Co. will probably sign a new restructuring agreement for its four ailing banks with the state-run Korea Deposit Insurance Corp. The four banks - Hanvit, Cheju, Kwangju and Kyongnam - have been placed under the government-run holding company as part of the nation's financial restructuring efforts.

Each of the commercial lenders had already signed memorandums of understanding for their management normalization plans with the deposit insurer, but all were inked before the holding company was set up. Thus there are conflicts in the banks plans to merge their information technology and credit card units.

"Restructuring plans under the MOUs were signed on the assumption that each of the four banks would operate independently," said a Woori official who asked not to be identified. "The holding company, which is trying to integrate the similar operations of the banks, cannot accept the plans."

Woori is now in talks with the deposit insurer for a full revision of the plans, and the two state-run institutions are discussing the signing of an agreement, which would require a revision of the current law for the management of state bailout funds to scrap the agreements between the insurer and the banks.

by Huh Kwi-sik