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New leader of Woori Group vows to grow fast

Jan 15,2019
Choi Jong-ku, Financial Services Commission chairman, fifth from left, and Sohn Tae-seung, Woori Financial Group chairman and Woori Bank CEO, sixth from left, along with other financial officials celebrate the reinstatement of Woori Bank as a financial holding company on Monday at the bank’s headquarters in central Seoul. [YONHAP]
New Woori Financial Group Chairman and Woori Bank President Sohn Tae-seung laid out plans to make the group Korea’s No. 1 financial group in two to three years through aggressive acquisitions of nonbanking financial companies.

“Currently, the bank’s assets account for 99 percent of our holding company,” Sohn said on Monday. “But in the mid-to-long term, we will raise the ratio of nonbanking businesses to 30 percent or as much as 40 percent.”

Woori Bank on Monday held a ceremony celebrating its reinstatement as a financial holding company, a status it lost in 2014 after selling its nonbanking affiliates after failing to privatize.

Woori Bank was the first bank in Korea to establish a financial holding entity in 2001.

With the reinstatement of Woori as a financial holding group, there are now five banking group with financial holding company structures: KB, Shinhan, Hana, Nonghyup and Woori.

Chairman Sohn said this year, the group will aggressively look for nonbanking companies starting with small businesses including asset management companies, real estate trusts and savings banks to invest in.

“Woori Financial Group is strong in the banking sector, but it is not in nonbanking [financial] areas,” Sohn said.

Brokerages and insurance companies, which need larger investments, will be pursued more gradually, possibly through joint investments with other financial companies.

“In areas where we can’t make a direct investment [at the moment], we will participate with other companies and increase our stakes to 50 percent,” Sohn said.

He said while he can’t disclose the names of companies that he’s interested in, negotiations will be starting immediately.

“We estimate that our total assets at the end of last year were around 310 trillion won [$276 billion],” Sohn said. “But because we don’t have a brokerage firm or insurance company, we are different compared to other banking groups.

“For the time being, acquiring an insurance firm wouldn’t be easy since we need to secure investments,” the chairman continued. “Additionally, if we are to acquire a brokerage within this year, we will look into different ways, such as joint investments.”

He said because this year will be focused on mergers and acquisitions (M&As), it will only be next year or the following year when they could expect to see tangible results.

“We’re building the foundation of becoming the No. 1 financial group in 2020 or 2021,” Sohn said.

These changes will benefit the bank’s customers as it will provide diverse financial services and products in a one-stop service.

“[With reinstating as a financial holding company,] customers will be able to get comprehensive financial services in a single sitting,” Sohn said. “Additionally, they will have more benefits from consolidated marketing within the group.”

He also laid out his plans for pioneering into new markets rather than competing against other local banks in the limited local market. This includes expanding its presence overseas, particularly in Southeast Asia.

“In the global market, especially Southeast Asia, we have increased significantly our network, and if it is needed, we plan on making additional M&As in Southeast Asia,” Sohn said.

“We also plan to expand our global network in nonbanking financial services.”

Sohn said he will raise the expertise of his employees.

On the group’s governance structure, Sohn waved off concerns over manipulation of power, saying that Woori Financial Group’s management decisions are made not by the chairman alone but rather by stockholders.

“Oligopolistic stockholders form the board of members,” Sohn said. “Under this system, the chairman or the head of the bank [of which he is both] can’t make decisions on their own.”

Earlier during the ceremony, Financial Services Commission Chairman Choi Jong-ku said the government will work on privatizing the Woori Financial Group this year.

The government currently has an 18.4 percent stake.

In 2017, the government sold stakes to seven institutional investors including IMM Private Equity, Tongyang Life Insurance, Kiwoom Securities and Mirae Asset Global Investment, who are the so-called oligopolistic stockholders. Currently, these seven investors own a 27.2 percent stake in Woori Financial Group, making them together the largest stakeholder.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]


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