FSC to announce Woori Bank privatization plan

[THE INVESTOR] South Korea’s main financial regulator will announce a set of confirmed measures to privatize Woori Bank, a single state-owned commercial bank, on Aug. 22.  

It is the fifth attempt by the Financial Services Commission and its Public Fund Management Committee to sell a controlling stake in the bank, currently held by the Korea Deposit Insurance Corp. 

The KDIC holds a 51 percent stake in Woori Bank. The Korean government established Woori Bank by merging five struggling banks with a total of 12.8 trillion won ($11.5 billion) in 1998 in the wake of the Asian financial crisis. It has recovered 8.2 trillion won so far, and plans to pull out the remaining 4.8 trillion won by selling the stake.

According to market speculations, the FSC hopes to sell a 30 to 40 percent out of the KDIC stake to a multiple number of investors, splitting the shares into 4 to 10 percent chunks. Foreign investors have been welcomed by the FSC.

“We will be as careful as possible to make the deal successful this time,” said Yim Jong-yong, chairman of the FSC at a press conference earlier this month. “The government does have a strong determination to push for it soon.” 

The financial regulator has made four failed attempts to privatize the bank since 2010. It wanted to find a single qualified owner for the controlling stake, but failed each time.

Critics have been pointing out that the FSC set the bank’s price too high considering its weak performances.

To add to the government’s efforts, Woori Bank itself has been trying to improve its financial health. The bank’s net profit stood at 750.3 billion won in the first half of this year, increasing 45 percent from a year earlier. The substandard and below loan ratio of the bank fell to 1.06 percent.

By Song Su-hyun/The Korea Herald (song@heraldcorp.com)