A group of high-profile financial officials from Korea flied to the Middle East on Sunday to check foreign demand for a stake in Woori Bank, a state-run lender that has been put up for sale.

The delegate, led by Financial Services Commission vice chairman Jeong Chan-woo, left the country two days after Woori Bank received a letter of intent from the Abu Dhabi Investment Council. 

ADIC, launched in 2007, is one of several sovereign wealth funds managed by the United Arab Emirates with assets of at least $90 billion (100.5 trillion won).

The Seoul government has been trying to sell its 51.04 percent stake in Woori Bank since 2010 in a bid to retrieve public funds worth 13 trillion won that were spent to bail it out following the Asian financial crisis in the late 1990s.

During five-day trip, the FSC officials are scheduled to meet with state-run Middle Eastern investors, including the ADIC, Investment Corporation of Dubai, and the Kuwait Investment Authority, to see into whether they are willing to pay a reasonable price to acquire the Woori stake, according to the financial watchdog.

“In the past, the conventional selling strategy (of Woori Bank) was to announce bidding first and wait for bidders,” an official of FSC’s bank unit said.

“This time, we are proactively checking market demand and then we will carry out the selling process accordingly.”

The regulator is taking a cautious approach to gauging demand as its previous four attempts failed due to a lack of bidders.

“Retrieving as much public funds as possible” is one of the three key principles that Seoul has underscored in its sale of Woori Bank. Under this principle, the government has sought a 15,000 won minimum share price to recoup the bailout money.
The current stock price of Woori Bank, however, hovers around 9,000 won on the Seoul bourse, far lower than the government‘s guideline.

The other two factors to affect the selection of the buyer are “swift privatization” and “development of the financial industries.”

Yet industrial critics pointed out that the Korean regulator may have to make comprises to these principles to accomplish the deal.

By Chung Joo-won (joowonc@heraldcorp.com)