The Korean government said Friday it will hire three arrangers to start selling its majority stake in Woori Finance Holdings Co., owner of the nation’s second-biggest bank.

The government plans to select a preferred bidder by the end of March to buy at least 30 percent of Seoul-based Woori Finance, Min Sang-kee, head of the Public Fund Oversight Committee, said at a briefing.

The government’s 57 percent stake in the company is valued at 6.8 trillion won ($5.7 billion) based on current prices on the Korea Exchange.

The sale may help Korea fulfill plans create a bank big enough to compete on the international stage. KB Financial Group Inc. and Hana Financial Group Inc. have said they may merge with rivals as President Lee Myung Bak presses to raise the banking industry’s global competitiveness.

“Woori Finance will be at the heart of restructuring Korea’s financial industry,” said Chang In Whan, chief executive officer at KTB Asset management Co., which oversees $6.4 billion worth of assets in Seoul.

The sale will be open to domestic and overseas bidders. Two of the three arrangers will be domestic and the other a foreign firm, the commission said, without providing any names.

Woori Finance shares fell 2 percent to 15,000 won at 2:13 p.m. in Seoul, trimming the stock’s gain this year to 7.9 percent. The benchmark KOSPI index declined 0.6 percent.

The company’s Kyongnam Bank and Kwangju Bank units, based outside Seoul, will be sold separately, the commission said.

Woori Finance was created in 2001 as a holding company for banks that the government rescued during the 1997-98 Asian financial crisis, when Korea received a $57 billion bailout from the International Monetary Fund.

Korea has announced plans to privatize Korea Development Bank, with an initial share sale of its parent company planned for 2011. State-run Incheon International Airport Corp. also plans an initial public offer this year.

Woori Finance had total assets of 325.4 trillion won as end of March and operates three banks, including Woori Bank. It also runs a securities unit, Woori Investment & Securities Co., as well as asset management and private equity business.

Chairman Euh said on June 25 that he doesn’t plan to make any takeovers for at least two years and that market conditions will dictate the pace of consolidation among Korea’s financial companies. Combining KB Financial with Woori Finance is one option to consider in the future, he said.

“KB is strong in retail banking while Woori’s good in the corporate segment, hence the combination of the two would be the best scenario to boost competitiveness after merger,” said Kim In, an analyst at Eugene Investment & Securities Co. in Seoul. 

(Bloomberg)