Three banking groups likely to bid for Samhwa

Published : Jan 25, 2011 - 21:19 Updated : Jan 25, 2011 - 21:19

   Three banking groups, including top financial firm Woori Finance Holdings Co., have expressed their intention to buy an ailing savings bank, a state insurance agency that arranges the deal and sources said Tuesday.

   On Jan. 14, the financial regulator suspended mid-sized Samhwa
Mutual Savings Bank for six months as it failed to meet regulatory
capital requirements. State-run Korea Deposit Insurance Corp.
(KDIC) is currently arranging to sell the troubled savings bank
unless the bank normalizes its capital strength by mid-March.

   "A total of three prospective buyers have submitted letters of
intent to join the bidding," KDIC said in a press release after
closing the application process.

   Sources said earlier that Woori Finance, Shinhan Financial
Group Co. and Hana Financial Group Inc. were expected to express
their intent to bid for the embattled savings bank.

   No. 2 financial services company KB Financial Group was not
expected to join in the preliminary bidding as its head has
repeatedly put priority on improving its slackening profitability
and efficiency over any takeover attempt.

   The government is seeking to select a preferred bidder for the
savings bank by mid-March 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)