Woori Financial pinning hopes on lawmakers’ push while government takes wait-and-see stanceWoori Financial Group, which aims to launch a stand-alone credit card operation, is pinning hopes on an early law revision so that its goal can be attained this year.
Though the financial group has sought to spin off a credit card unit from Woori Bank for about a year, financial regulators are taking a wait-and-see or skeptical position over the move amid heated competition in the card industry.
But a revision of laws on credit financing businesses could pave the way for Woori Financial to launch Woori Card without extensive regulatory screening.
On Wednesday, lawmakers of the National Policy Committee of the National Assembly held the first discussion on the motion, which was proposed by a group of lawmakers last year.
If the revision passes the Assembly through several more discussions, a financial group may be allowed to launch a stand-alone credit card subsidiary as long as the unit’s total assets do not surpass 10 times its equity capital.
Though the new legislation is designed to block the reckless expansion of credit card issuers, Woori Card satisfies the guideline as its total assets stay at four-fold its equity capital.
Since the first half of 2011, the Financial Services Commission has also strived to introduce the assets to equity capital, also called the leverage ratio, for its new regulatory policy for the credit card sector.
FSC officials reportedly picked the introduction of the leverage ratio as a prerequisite for Woori Bank’s credit card business.
“Woori has yet to apply for the spin-off. I believe the issue should be reviewed in connection with the market situation later,” said an official of the Financial Supervisory Service, an arm of the FSC.
Last September, the board of directors of Woori Financial approved the group’s project to launch Woori Card.
Though Woori Card had been an independent subsidiary of the group, the card issuer was absorbed into Woori Bank in the wake of the 2002-2003 credit card fiasco.
Woori Financial made the project public on the stock market in April 2011.
Some analysts assume that the FSC may support the spin-off, citing the regulator’s long-standing policy to privatize Woori Financial Group.
The FSC has failed to attract many potential bidders due to unfavorable sale terms and the high value of Woori Financial, which has total assets of about 10 trillion won ($877 million).
In March 2011, KB Financial Group launched a stand-alone credit card firm after the money-spinning unit was merged into the bank in 2003.
In 2010, Hana Financial Group spun off the Hana SK Card and launched new marketing activities in partnerships with several SK Group affiliates.
By Kim Yon-se (
kys@heraldcorp.com)
