After four failed attempts, the Korean financial regulator came up with a revised measure to privatize state-owned Woori Bank on Monday, in a bid to make the sale successful this time.

In the fifth attempt, the Financial Services Commission and its Public Fund Management Committee decided to sell a total of 30 percent out of a 48.09 percent stake held by the Korea Deposit Insurance Corp. to multiple investors, splitting the shares into 4 to 8 percent chunks. The committee expects a minimum of four investors bidding for the 8 percent stake. 


The regulator had previously wanted to sell over 30 percent of the stake to a single buyer.

The KDIC currently holds a 51.06 percent stake in Woori Bank. Some 2.97 percent of the KDIC stake is exempted from the sale, since the portion is going to be spared for call options for minor stakeholders that were selected last year.

The Korean government established Woori Bank by merging five struggling banks with a total of 12.8 trillion won ($11.36 billion) in 1998 in the wake of the Asian financial crisis. It has recovered 8.3 trillion won so far and plans to pull out the remaining 4.5 trillion won by selling the stake.

Considering that Woori Bank’s shares have been trading at between 10,000 won and 13,000 won these days, the KDIC may recuperate 3 trillion won to 3.9 trillion won, if the entire 30 percent stake is sold.

Staring from Sept. 23, potential buyers are required to submit a letter of intent to the financial regulator to participate in the bidding.

Those who bid higher will get to purchase the stake first. In addition, the committee will offer incentives for bidders applying for larger stakes. The bidding will close in November.

However, the FSC said it will not only look at the bidding price, but also other factors.

“The latest sale is a type between a typical handover of the management right and minority stake,” said Yoon Chang-hyun, the chairman of the committee. “Considering that, we will take into account factors other than the bidding price to select a preferred bidder.”

The committee declined to specify what the factors will be.

However, it will examine the qualifications of bidders based on the three principles established by the FSC: swift process of privatization, maximum recovery of the public fund and contribution to development of the financial industry.

Bidders who get more than 4 percent stakes will be granted the right to recommend outside directors for the bank’s boardroom.

They will also be able to take part in nominating the next president of the bank.

If the deal is successfully completed, the memorandum of understanding signed between the KDIC and Woori Bank to normalize the bank’s operations in 2000 will be closed.

For the remaining 21 percent stake held by the KDIC, the public institution will carry out “minimal management” of the public fund in order to seek upside gains, the committee said.

From 2010 to 2014, the financial regulator made four failed attempts to privatize the bank. It wanted to find a single qualified owner for the controlling stake, but failed to do so each time. In 2014, China’s Anbang Property and Casualty Insurance was the only bidder for the bank.

Last year, the FSC contacted the Abu Dhabi Investment Corp. and a Saudi Arabian sovereign wealth fund, requesting them to be anchor investors for the bank, but it could not appeal to them largely due to economic conditions in the Middle East such as falls in oil prices.

“The government, the KDIC and Woori Bank, have been making sincere efforts to make the sale successful this time, and worked closely together to raise the market value of the bank,” said Yim Jong-yong, the chairman of the FSC. “The privatization of Woori Bank has been a key task of the government’s financial reform plans, a task that truly means reform.”

By Song Su-hyun (song@heraldcorp.com)