Gov't puts two Woori affiliates up for bidding

The government kicked off Monday its long-pending sale of Woori Finance Holdings Co. by putting two of its bank affiliates up for a bidding, as it takes a full approach in its fourth attempt to privatize the state-run banking group.

The state-run Korea Deposit Insurance Corp. (KDIC) posted a sales notice to sell its 56.97 percent stake in Kyongnam Bank and Kwangju Bank, the two regional banks tied with Woori Finance as of July 15, according to the KDIC.

The bidding comes as the first part of the government's three-staged sale plan of the banking group worth more than 300 trillion won (US$267.4 billion), announced in late June.

It has grouped the banking firm's 14 affiliates into three batches and plans to sell each until the end of 2014. It will sell the regional banks first, with the brokerage unit, including Woori Investment & Securities Co., to be auctioned off early next month and Woori Bank as the last in January next year.

The government has tried to sell Woori Finance three times since it was created with five local banks in the aftermath of the

1997-1998 Asian financial crisis with 13 trillion won in taxpayers money but failed due to a lack of buyers.

The KDIC will take preliminary biddings until Sept. 23 and select the preferred bidder in November after it completes the due diligence on the buyer, it said. The largest stakeholder of the banking giant has picked three brokerage houses -- KDB Daewoo Securities Co., Samsung Securities Co. and JP Morgan Korea as sale managers.

The values of Kyongnam Bank and Kwangju Bank are estimated at about 1.3 trillion won and 1.2 trillion won, respectively.

Regional-based financial holding companies such as BS Financial Group Inc., which owns Busan Bank, reportedly have shown interest in the bidding, industry sources said.

The possible bidders may include some foreign players like the Industrial and Commercial Bank of China (ICBC) and private equity funds.

The Financial Services Commission (FSC) stressed that the banks will be auctioned off at the highest price as it is a competitive bidding.

Such remarks by the FSC came as the regional financial firms have been asking the FSC to give them preferred negotiation rights citing "regional development," though the FSC made it clear there won't be any special treatment for them. (Yonhap News)