3 bidders launch due diligence on ailing savings bank

Published : Feb 4, 2011 - 12:35 Updated : Feb 4, 2011 - 12:35

Korea's three financial services companies, including industry leader Woori Finance Holdings Co., have launched a due diligence on an ailing savings bank, industry sources said Friday.

Mid-sized Samhwa Mutual Savings Bank has been suspended by the

financial regulator as it failed to meet regulatory capital requirements. The government is seeking to sell the embattled savings bank unless it normalizes its capital strength by mid-March.

Woori Finance, Shinhan Financial Group Co. and Hana Financial Group Inc. expressed their intention to bid for the troubled savings bank. According to sources, the three banking groups have embarked on due diligence on the savings bank with an aim to complete it by mid-February.

The government is seeking to select a preferred bidder for the savings bank after opening a bidding race in mid-February.

The move is part of the government's drive to overhaul the troubled savings bank industry, which is struggling with a pile-up of rising bad loans stemming from sour construction project-related lending.

The head of Woori Finance said earlier the state-owned group will seek to buy one or more savings banks in a bid to help curb systemic risks stemming from soured property loans. (Yonhap News)