Korea's top financial regulator said Tuesday it is not desirable for KDB Financial Group Inc. to bid for state-run Woori Finance Holdings Co., raising the chances that the much-awaited sale of the group will hit a snag.
Korea announced a road map for the sale of state-run Woori Finance, the country's No. 2 banking group, on May 17, after it suspended the deal worth around $6 billion to sell its 56.97 percent stake in the group last December due to a lack of investor interest.
Kim Seok-dong, chairman of the Financial Services Commission (Yonhap News)
"As there has been not enough public consensus about KDB Financial's purchase of Woori, the financial watchdog has come to the conclusion that it is not desirable for KDB Financial to bid for a stake in Woori Finance," Kim Seok-dong, chairman of the Financial Services Commission (FSC), told lawmakers.
KDB Financial, which the government is also seeking to privatize, has emerged as a potential buyer for Woori Finance as its head, Kang Man-soo, a former finance minister, openly expressed the group's interest.
But speculation has been rising that the government intends to sell Woori Finance to KDB Financial as it seeks to revise related laws to make it easier for financial holding firms to buy a controlled stake in Woori.
The FSC has been pushing to allow local financial services firms to buy only a 50 percent stake in a state-run bank holding firm in order to consolidate control of the target company.
Currently, a banking holding company is required to purchase the entire stake.
In an apparent bid to dispel such speculation, the FSC officially expressed its opposition against KDB Financial's participation in bidding for Woori Finance.
"The government will provide level playing fields for all local and foreign players to bid for the stake in Woori. Korea plans to push for the Woori sale in a fair and transparent manner," Kim said.
The government will accept letters of intent to bid for the stake by June 29 as planned and will pick a preferred bidder by September.
Korea injected 12.8 trillion won ($11.8 billion) of taxpayers' money into Woori Finance in a bid to rescue the company from near bankruptcy in the aftermath of the 1997-98 Asian financial crisis. (Yonhap News)