[EDITORIALS]Privatize, don't supervise

The Ministry of Finance and Economy's plan to sell the government's holdings of stakes in local commercial banks is meaningful for the plan presents a relatively detailed timetable and method for lenders that were nationalized in the aftermath of the 1997-1998 financial crisis.

There is no objection at home and abroad to the call for a rapid bank privatization, as Korea's banking sector, which is virtually run by the government, except for Shinhan, Hana and KorAm banks, certainly has limits in its efficiency and competitiveness.

The key part of the privatization plan is to sell the government's equity holdings in Woori Financial Group, Chohung Bank and Seoul Bank, beginning in the first half of this year, in a bid to recover the 153 trillion won ($115 billion) in bailout money and privatize the banks within three to four years. Still, a closer examination of the plan reveals a lack of will on the government's part to truly privatize the commercial lenders. Instead, the government places more weight on reducing its stakes in banks. For instance, the government plans to privatize Woori and Chohung in earnest after next year by lowering its stakes in the lenders below 50 percent. In a sense, the government wants to concentrate on selling bank shares this year and pass the buck on the thorny issue of bank privatization to the next administration. The government said that it will sell Seoul Bank this year. Since the government prefers that the bank merge with a financially healthy lender, the plan is not practical because few sound banks seem to be interested in taking over Seoul Bank.

How the government will shed its stakes should also be questioned, as the equities, worth more than 9 trillion won, can have a tremendous impact on the supply-demand situation in the local stock market. If the real purpose is to reduce the government's stakes in banks, rather than to privatize them, the most important task will be to guarantee banks' full independence in management. No matter how much of its bank stakes the government sheds, the privatization plan would go nowhere as long as the government continues to intervene in the management of banks.