FSC chief Kim says local, foreign investors will be treated equally


South Korea plans to seek bidders for its stake in Woori Finance Holdings Co. in a third attempt to sell the nation’s largest financial company by assets.

The government will hold an international auction and announce details on the plan “soon,” Financial Services Commission chairman Kim Seok-dong said in Seoul on Wednesday. Local and foreign investors’ bids will be treated equally, he said.

A rally in Asian equity markets this year, including an 8 percent gain in South Korea’s 60-member Kospi financial index, may signal a rebound in investor appetite for the company’s assets. President Lee Myung-bak’s earlier attempts to sell the government’s stake failed to attract bidders as global markets were recovering from financial crises in the U.S. and Europe.

“Although we failed in last year’s sale due to the unfavorable international financial market environment, circumstances have improved and the businesses at Woori are also in much better shape,” Kim said. “I think the environment is mature for the sale now.”

Lee, as part of a 2007 election pledge, is seeking to privatize companies the government bailed out more than a decade ago and to consolidate banks to boost their competitiveness.

The state abandoned an attempt to sell its Woori stake in August last year after receiving only one bid, led by South Korean private-equity MBK Partners Ltd. It spiked a first auction in December 2010 due to lack of interest from buyers.

“I doubt whether the government will succeed in getting sufficient offers for Woori in this round of auctioning,” said Kim Eun-gab, analyst at NH Investment & Securities Co. “I don’t see any improvement in the environment. Banks in Europe and the U.S. are selling off their own assets and there’s no clear domestic candidates.”

KB Financial Group Inc., owner of the country’s biggest lender and often cited as potential Woori buyer, “We cannot afford” to buy the stake, KB Chairman Euh Yoon-dae told reporters on Wednesday, following FSC chairman Kim’s comments. KB is planning to make a bid for ING Groep NV’s South Korean insurance business, once the Amsterdam-based company announces its sale plan, Euh said.

Woori was created in 2001 as a holding company for banks that the government rescued following the Asian financial crisis in 1997 and 1998, as part of a push to make the banking industry more competitive.

The government spent 12.8 trillion won to aid Woori and has recouped 5.4 trillion won so far through block sales of shares. It now owns 57 percent of Woori through state-run Korea Deposit Insurance Corp.

Daewoo Securities Co., JPMorgan Chase & Co. and Samsung Securities Co. were hired in September 2010 to help Korea Deposit sell its stake in Woori. 

(Bloomberg)