S. Korea set to make 5th bid to privatize Woori Bank

The South Korean government will make its fifth attempt to sell a controlling stake in state-owned Woori Bank next month, following its previous failures to put the lender in private hands, industry sources said Monday.

The Public Fund Oversight Committee, a government-run body in charge of privatizing the country's No. 3 bank, will unveil a new plan in mid-July after wrapping up a feasibility review.

Four previous auctions to sell Woori Bank have fallen through due to a lack of bidders, including the latest attempt where only one company had submitted a bid in November last year.

In November, the Financial Services Commission decided to take a two-track approach, selling a major 30 percent stake to a single buyer with the rest to a group of investors.

Currently, the state-run Korea Deposit Insurance Corp. holds a 51.04 percent stake in Woori Bank.

According to sources, this time the FSC is expected to divide the stakes into smaller portions and sell them to multiple investors, which would not produce a controlling shareholder.

"We are considering all measures including the oligopolistic stake-holding plan in order to seek the best option," said an official from the FSC.

However, market watchers noted that the stock price of Woori Bank, which closed at 9,540 won ($8.65) last week, is the key to the new sales plan.

In order to recoup the bailout fund worth 13 trillion won injected into Woori Bank, the deal should be set at 14,800 won per share.

If the FSC pushes with the oligopoly frame, it is unlikely to attract powerful investors who are interested in managerial rights of the country's No. 3 bank, they added.

Woori Bank, with 300 trillion won in assets, was established in 2001 by merging five troubled banks in the aftermath of the Asian financial crisis in the late 1990s.

The government has been trying to privatize the mega-sized bank since 2010 to recover the bailout money.

"It is impossible to achieve all goals at the same time; swift privatization, full recovery of the bailout fund and the development of the financial industry," said Kim Sang-jo, a professor at Hansung University. "Now we have one option left as we failed the double-track plan last year."

FSC Chairman Yim Jong-yong has said that the government is making efforts to raise Woori Bank's stock value to retain the goal.

"Woori Bank's share price is undervalued compared to the appropriate price. We need to push up the price by improving the bank's balance sheet," Yim said in a press meeting last month.

"And I know that foreign investors are worried about the Seoul government's possible intervention in a private bank in the future.

The government will never engage in management of Woori Bank after privatization." (Yonhap)