Wrap up the bank privatization

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Wrap up the bank privatization

The fifth attempt to sell the government stake in Woori Bank kicked off to a good start. In the offering of a 30 percent stake, currently held by Korea Deposit Insurance Corporation (KDIC) who own a total of 51 percent in the bank, in segments of four to eight percent, as many as 18 bidders handed in letters of intent. From the preliminary bid, demand has exceeded supply, raising prospects for the final auction in November and paving the way for the privatization of the country’s fourth largest bank after four failed previous attempts.

The government changed the sale plan by offering pieces in the Woori Bank to multiple investors instead of trying to sell it off in a lump sum for a premium. The government still remains the majority shareholder with a 21 percent stake even after it sells off 30 percent, but pledged that it won’t wield any authority or interfere in appointments.

But the final auction can only be successful when the shortlisted candidates offer bid prices higher than the KDIC desires for its shares. The public asset management law requires three principles in selling off government stakes — the maximization of public fund investment, a fast privatization procedure, and a contribution to advancement in the domestic financial industry.

The government has been dithering in the sale of its stake in Woori Bank, fearing public backlash for not getting good money for its public fund spending. In the meantime, the bank that was once one of the largest has been losing competitiveness, ruined by poor management..

The government must see through the sale in this round no matter what. It should also speed up the sale of the remaining share so that Woori Bank can be a fully private entity. It should also set a deadline for when it will finalize the sale of all the financial and nonfinancial companies that came under government ownership through bailouts, so that they are not abused as a safe haven for political appointments by future governments.

JoongAng Ilbo, Sept. 26, Page 30
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