Transparent sale of ‘our bank’The government has finalized its plan to sell off its majority stake in Woori Financial Holdings in hopes of privatizing the country’s third-largest financial group once and for all.
Under the timetable, it will name underwriters for the sale of the 57 percent stake in the group - so far held by state-run Korea Deposit Insurance Corp. - by early August and determine primary bidders before March, signing off the sale during the first half if all goes well.
The government plans to seek separate buyers for the group’s smaller bank subsidiaries Kyongnam Bank and Kwangju Bank and bundle Woori Investment Securities into the Woori Financial sale package.
Woori Financial was created to merge ailing banks that received massive bailouts from the government in the wake of the 1997 financial crisis. The government has been trying to sell off its stake to retrieve public funds, but could only offer bits through public offerings since 2004 due to the lack of a buyer able to afford the group, worth more than $6 billion.
The recent plan reflects the government’s desire to accelerate the process and privatize the major financial holding group through a profitable deal. The government has been putting off the sale due to poor market conditions at home and abroad.
But the government has failed to present how it plans to sell its 57-percent stake all at once. It remains unclear on whether it can sell off the entire stake or if it will seek to merge the group into a bigger local player.
As a result, the market is abuzz with speculation about the potential buyer. But candidates are limited, as the financial holding company law and bank law restrict what firms can take over Woori Financial. For example, its government-held stakes are off-limits to corporate and foreign capital.
Also, there are few financial lenders that can afford the group. The only option left is for the government to sell an affordable portion of its stake to a larger banking group and demand payment in shares in the newly merged bank.
Under such a process, the government would neither retrieve much cash from the sales nor would it be able to divest itself from the banking business. The new bank would still remain under the influence of the government due to the remaining stake. The new bank would also be dogged with criticism that it enlarged itself using taxpayers’ money.
The government can consider seeking a merger and a stake sale at the same time. Now that the timetable is set, it must push forward with the process and prioritize profitability, transparency and fairness.