Foreigners can bid for Woori: FSC

After four failed attempts since 2010, Korea’s financial regulator is opening up a sale of state-owned Woori Bank to foreign players and hoping to reach a deal this year.

Financial Services Commission (FSC) Chairman Yim Jong-yong confirmed Thursday that the regulator will make clear that the Korean government is determined to sell off the bank this time and welcomes any foreign institutions if they are qualified in accordance with Korean law.

“We will not discriminate against overseas institutions if they are interested in the deal and meet qualifications as the new shareholder of the bank,” Yim said at a lunch meeting with correspondents of the foreign press in Seoul.

According to the chairman, Park Sang-yong, head of the Public Funds Oversight Committee, an in-house agency of the FSC, is currently in the Middle East meeting with officials of state-run wealth funds to try to interest them in Woori Bank.

Park and Woori Bank officials arrived in the United Arab Emirates on Sunday and reportedly met with officials of one of Abu Dhabi’s sovereign wealth funds, according to local media reports. After attending a conference held by Morgan Stanley in London, they are scheduled to visit Qatar and Kuwait to appeal to other state funds.

Under the stewardship of Yim, who took office in March, the FSC will examine current demand for the deal in the market both at home and abroad and come up with a new plan for the sale this year.

There has been criticism about the governments failed attempts to sell the bank, with some saying that the government set the price of Woori Bank too high at 3 trillion won. Investors doubted it was worth paying that much to buy all the shares to secure management rights. The bank’s net profit last year was 1.2 trillion won, below the market consensus of 1.4 trillion won.

“Whether it would be a bloc sale or split sale, we will study market demand first and then suggest possible sale plans that would meet needs of market players,” Yim said. “To make the deal succeed this time, the government will help raise the value of the bank. Its stock price needs to hit at least 14,800 won in order to secure the government price.”

The chairman acknowledged that there are views that Woori Bank is saddled with a lot of soured bonds.

“We have requested the bank make efforts itself to improve its fiscal soundness,” Yim added.

Woori Bank is a government-owned commercial bank that was established in 2001 in a merger among five banks hit by the Asian financial crisis in the late 1990s.

Korea Deposit Insurance Corporation (KDIC) is the largest shareholder, owning a 51 percent stake in the bank. The National Pension Service owns a 7 percent stake.

There have been four major attempts by the government to privatize the bank since 2010. All of them failed. In its first attempt, the government wanted to sell KDIC’s stake to a single bidder, but it failed to attract multiple bidders.

By law, there must be more than two bidders to start an open bidding.

In 2011 and 2012, the sale was canceled again due to a lack of bidders. MBK Partners, a local private equity fund, was the only one to submit a bid in 2011, and there was no bid in 2012.

Last year, the government decided to sell 30 percent with management rights and 26.97 percent to minority investors. But Anbang Property and Casualty Insurance, a major financial institution in China, was the only bidder interested in the managerial stake and the deal was scrapped again.

Of the minority stake, a 5.94 percent stake was sold to investors as of November 2014.

Although the chairman said no definitive plan has been made, market analysts speculate that the regulator is likely to split the 30 percent managerial stake and sell them to several buyers.

BY SONG SU-HYUN [song.suhyun@joonang.co.kr]