Government accelerates privatization of Woori, sparking speculation about preferred bidders


South Korea’s financial market on Wednesday reexamined the longstanding rumors that KB Financial Group might move to take over the state-run Woori Financial.

The Korea Exchange asked KB to clarify its position on the market talk in the form of a public disclosure, even though the financial heavyweight had reiterated its neutral stance more than once in recent weeks.

The speculation over the merger between the two banking giants underscores the significance and potential impact of a possible tie-up, analysts said.

Well aware of the sensitivity of the matter, KB officials told the local press on Wednesday that the group has “no plans” to take over Woori.

The market’s reignited attention to the issue came as the Korean government was reportedly accelerating the sale of its 56.97 percent stake in Woori. The state-run Korea Deposit Insurance Corporation holds the stake in question, and the government wants to finish off the privatization plan by the end of this year. 

Policymakers involved in the sale and lead managers ― Daewoo Securities, Samsung Securities and JP Morgan ― are set to hold a meeting on Friday to discuss the stake sale, lending some currency to the financial rumor mill churning out various scenarios.

At the meeting, officials from the lead managers will offer a briefing on the market conditions related to the stake sale. With the general elections slated for April 11, a formal announcement on the sale is expected within the first half of this year.

The local financial regulators and policymakers are showing greater confidence in completing it as planned this time, following two failed attempts.

When it comes to the privatization method, an acquisition by a financial holding company is deemed unrealistic as a bidder would have to buy a more- than 95 percent stake in Woori. A merger, therefore, is being floated as a feasible option, largely because it would lower the financial burden on the part of the bidder.

The only problem with the merger option is that the government would not be able to recoup its investment in Woori immediately.

KB reportedly has left the door open for a take-over bid, but has made no clear signals as yet.

Last year, KB did not participate in the botched privatization project, refusing the government’s repeated requests. KB’s official reason was that it was “not ready.”

In a recent interview with The Korea Herald, KB Financial chairman Euh Yoon-dae said the group would not bid to take over Woori.

“This year, we have no plan to acquire any financial company, including Woori Financial Group and the group’s subsidiaries,” he said in mid-January.

Woori shares ended down 0.74 percent at 13,500 won and KB rose 1.65 percent to 43,000 won on the stock market on Wednesday.

By Yang Sung-jin (insight@heraldcorp.com)