The sale of the South Korean government’s controlling stake in Woori Finance will likely spill over to next year, reported JoongAng Daily, citing Jin Dong-soo, the chief of regulator Financial Services Commission (FSC).
According to Jin, preparation for the proposed sale, expected to be wrapped up by this June, may not be completed before the year-end.
“The preparation [of the Woori privatization proposal] may take longer than initially expected. It could be delayed even until after the end of the year,” Chin Dong-soo, the chairman of the Financial Services Commission, told reporters yesterday.
The FSC had earlier planned to submit its privatization proposal for Woori by the end of June. Chin gave no reason for what was causing the possible delay.
The privatization had appeared on track earlier this month when state-run Korea Deposit Insurance Corp., which holds the government’s stake in Woori, sold a 9 percent stake in Korea’s third-largest banking group in a block deal for $1 billion. This left KDIC with a 57 percent stake in Woori.
The KDIC so far has recouped 5.1 trillion won ($4.6 billion) out of the 12.8 trillion won it invested in 2001 to bail out several troubled banks that were merged to form Woori.
The agency began selling off its stake in 2002, with an initial 12 percent stake that was sold to the public that year and further disposals since then.
The privatization of Woori was expected to set the stage for the consolidation of the banking sector since Woori was seen as possibly merging with another bank to form a Korean banking giant that would be globally competitive.
KB Financial Group and Hana Financial Group have been mentioned by local analysts as possible merger partners with Woori. KB’s consumer banking operations would complement Woori’s corporate banking.
But Chin suggested yesterday that the government may not push for a mega bank in spite of earlier suggestions that it favored the idea.
“If I have to choose between size and competitiveness, the latter must come first,” said Chin. “Take Hyundai and Samsung Electronics as examples. They have not gained competitiveness because they are large, but they have become large because they have competitiveness.”
“We first have to think about what we need, whether it should be a mega bank and what can we gain from the establishment of mega banks,” said a government official.
This delay will also impact Lone Star’s sale of Korea Exchange Bank (KEB) as KB Financial and Hana Financial have also been linked to that deal.
(Source: JoongAng Daily)
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