SEOUL: South Korea announced a fresh plan to sell state-run Woori Bank following four previous failures to put the country’s third-largest lender into private hands, a state committee said.
The government has been trying to sell its 51.04 percent stake in the bank since 2010 in a bid to recover public funds of some 13 trillion won (US$11.3 billion) injected to bail it out following the Asian financial crisis in the late 1990s.
The latest sale plan is its fifth bid as four previous auctions fell through due to a lack of bidders, including the latest attempt where only one company had submitted a bid in November last year.
The Public Fund Oversight Committee (PFOC), a government-run body in charge of privatizing Woori Bank, said it will take a two-track approach to sell the stake held by the state-run Korea Deposit Insurance Corp. (KDIC).
Up to 40 percent stake will be sold to a single buyer or multiple investors, while the rest will be up to smaller investors.
The government will also seek to divide the stake into smaller pieces and sell them to multiple investors to prevent a single shareholder from controlling the bank, it said.
“We will push for the sale as soon as possible if the market condition matures, though market research showed that there is not sufficient demand for Woori Bank,” said PFOC Chairman Park Sang-yong.
But he said the “matured condition” does not mean that the government will postpone the sale until Woori Bank’s stock price reaches about 13,500 won. The Financial Services Commission, the top financial regulator, had earlier mentioned that the appropriate stock price to recoup the bailout money is 13,500 won.
“We just released the plan to boost the momentum of its privatization and also prop up its share price,” said Park. “But we don’t set the minimum line, or price floor.”
Shares of Woori Bank traded at 9,040 won on the Seoul bourse at 10:40 a.m., up 1.23 percent from the previous close, with the benchmark KOSPI gaining 0.08 percent.
It is the first time for South Korean financial authorities to adopt the so-called oligopoly frame in the local financial industry, under which multiple shareholders will collectively control the board of directors.
In its earlier sale bids, the government had tried to sell the entire stake to a single entity but it failed to attract any eligible bidders for the mega-sized bank.
In November, it came up with a new plan to sell a controlling 30 percent stake to a single buyer with the rest going to minor investors.
“This is the first attempt in Korea to set up multiple major shareholders in a financial company,” Park said. “So there are many things to check and prepare. The PFOC and KDIC will design a detailed schedule in the coming months.”
South Korea’s current banking law allows a non-financial company to hold up to a 4 percent share in a financial firm with voting rights.
The PFOC chairman also noted that the government will not intervene in Woori Bank’s management after the bank is privatized.
“Many investors are worried about possible government intervention as it has done for more than 10 years,” he said. “We will make efforts to shrug off such concerns and help raise the corporate value.”
Woori Bank, with 300 trillion won in assets, was established in 2001 with the merger of five troubled banks in the aftermath of the Asian financial crisis that put South Korea on the brink of default.
