Woori due to spin off credit card unit

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Woori due to spin off credit card unit

The nation’s financial regulator is poised to give the green light to Woori Bank’s plan to spin off its credit card segment, heralding fiercer competition in market, sources said yesterday.

The Financial Services Commission will likely allow the lender’s card division to separate and stand on its own at a regular meeting scheduled for next Wednesday, according to FSC officials.

Both FSC and Woori Bank officials expect the spinoff will be approved smoothly, and the new card company will be able to make its market debut in March, as planned by Woori Finance Holdings, the holding company of Woori Bank.

The spinoff will increase the number of credit card firms in Korea to eight, including No. 1 Shinhan Card and KB Kookmin Card.

Market watchers raised concern that the launch of another solely owned credit card company will force the business to become even more cutthroat.

As card firms vie for a larger market share, more aggressive offers in credit lending and services may hinder their profitability and result in more defaults, they said.

In 2003, Korea was rattled by a credit card bubble, sending some players into bankruptcy, which hit the economy hard.

“Three or four players are enough, given the size of our economy. We can’t rule out another credit card meltdown,” a credit card company official said. Yonhap

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