Seoul sounding out bidders for Woori Bank sale

The Korean government may soon launch its fifth attempt to privatize Woori Bank and recoup the money it injected 16 years ago to bailout the bank, officials and deal observers said Wednesday.

“(The authorities) are showing a strong will to complete the sale and are speeding up preparations,” said an official at the Korea Deposit Insurance Corp. The state-run KDIC owns 51.04 percent of Woori, the country’s second-largest lender. 

A committee overseeing the public funds management under the Financial Services Commission is currently reviewing details of an auction process, while sounding out potential buyers for Woori shares, the official said.

The committee held a meeting on Monday, its second this month, to discuss matters related to the planned Woori sale, the FSC confirmed. The FSC, the regulator, oversees KDIC.

Its plan, decided in July years ago, is to sell 30 to 40 percent of Woori in several blocks ranging from 4 percent to 10 percent each.

This will be the fifth time that the Korean authorities have tried to sell Woori to recoup the public funds. Previous attempts failed primarily due to a lack of bids.

In its fourth attempt in 2014, Anbang Insurance of China sought to buy a controlling stake in the Seoul-based bank, but the auction process was cancelled due to a local law which requires it to have at least two bidders.

The market demand for the bank shares, however, remains unclear.

Woori Bank sales closed at 9,950 won ($8.6) per share Wednesday, sharply down from around 16,000 won in October 2010, the time of the first attempted sale. Its price-to-book ratio is just 0.35.

Mindful of this, Yoon Chang-hyun, head of the committee, said Monday that the committee would kick off the sale officially, only when it is certain that any sale will meet the multiple bidder guideline.

“The sale process will officially begin after we secure serious investors,” he said.

Woori Bank and the authorities have been sounding out potential buyers both at home and overseas for the past months. Some investors are said to have expressed interest in the sale.

Yonhap News reported that multiple parties, including Anbang Insurance, have shown interest in buying about a 10 percent stake in Woori or a smaller stake.

Meanwhile, the FSC denied reports that the public funds committee could consider allowing buyers to make partial payments, as opposed to full payments, in a bid to attract more bidders.

“The committee has not considered, or agreed to consider, the matter,” the FSC said in a press statement.

By Lee Sun-young (milaya@heraldcorp.com)