Foreign investors have apparently been banned from participating in the coming bidding for Woori Financial Group, the nation’s largest financial company by assets.
Financial Services Commission chairman Kim Seok-dong clarified Friday that the authorities will hand over the state-run financial group to a Korean bidder.
His remarks came during the FSC’s report to the National Assembly on the financial authorities’ planned sale of Woori Financial in which taxpayers’ money was injected for business normalization.
“Do we have to sell a Korean financial company to foreign investors again?” Kim asked in response to a lawmaker’s question.
While the portion of foreign stakes in most of the nation’s commercial banks has increased sharply, Woori Bank, the flagship unit of Woori Financial, has been regarded as the last bastion.
An issue is whether the foreign community will raise the issue of fairness, as Korea has handed over institutions, including Korea Exchange Bank, Korea First Bank and KorAm Bank, to foreign investors.
The state-run KDB Financial Group, a non-commercial financial company, has already emerged as the most competitive bidder for Woori Financial.
But the FSC chief reiterated that opportunity has been fairly open to domestic investors such as Hana Financial Group and KB Financial Group.
“KDB Financial is merely one of the candidates,” Kim told lawmakers, denying speculation that the authorities are initiating a merger between KDB and Woori.
A great portion of market observers state the possibility that Woori will eventually be acquired by KDB Financial, citing the latter’s chairman Kang Man-soo, a close confidant of President Lee Myung-bak.
But Kim commented on the scenario of KDB Financial’s takeover of it, defending the speculation that public funds could be used again for acquisition of a public funds-injected company.
Should KDB will be picked as the preferred bidder for Woori, takeover funds will be raised via the sale of assets, not via fiscal funds, he said. He also downplayed the possibility that a merged entity between the two state-controlled companies will still see a high ratio in the government’s shareholding.
A lawmaker from the main opposition Democratic Party alleged that the FSC is striving to select KDB Financial as the preferred bidder by revising the laws.
Through the revision, financial holding firms would reportedly be allowed to control another financial holding firm with a minimum 50 percent stake, lower than the current limit of 95 percent.
KDB Financial’s takeover of Woori Financial would make the consolidated entity the biggest local financial group by far with combined assets of about 500 trillion won. KB Financial’s assets stood at 344 trillion won, and Shinhan Financial holds 328.6 trillion won.
The financial authorities will accept letters of intent to bid for Woori Financial by June 29 before getting the final bids in September.
By Kim Yon-se (email@example.com