Privatization of Woori Bank
With submission of letters of intention for bidding for Woori Bank shares scheduled to be closed on September 23, a number of South Korean enterprise as well as financial investors are showing much interest in the stocks.
One of the most likely candidates is POSCO. At present, Woori Bank has 1% of POSCO shares. The steelmaker’s previous nature as a public enterprise is another positive factor. In addition, the relationship between POSCO and Woori Bank has recently become even closer as POSCO ICT, a subsidiary of POSCO, participated in the K-Bank Consortium for the establishment of an Internet-primary bank by Woori Bank, KT, Hanwha Life Insurance, etc. Once POSCO becomes the owner of the minority shares, it becomes capable of outside director recommendation and this power can be utilized for POSCO ICT to have a substantial presence in the Internet primary bank.
Another promising candidate in the business community is KT, which is a member of the consortium and a quasi-public enterprise as is the case with POSCO. These days, the banking industry is focusing on mobile banking and, as such, the likelihood of cooperation between Woori Bank and KT in any form is on the rise.
In the financial sector, the Korean Federation of Community Credit Cooperatives (KFCC) is being regarded as a more promising one than life insurers such as Hanwha Life Insurance and Kyobo Life Insurance. This is because the KFCC has more financial resources available than life insurers in the face of Phase 2 of IFRS 4 and is eager to expand its financial business. Also interested in the stocks in the financial sector are Korea Investment Holdings, Mirae Asset Financial Group and some domestic and foreign private equity funds.
In the meantime, some investors are focusing on JB Financial Group’s governance structure experiment with regard to a corporate governance structure Woori Bank will adopt in the future. JB Financial Group’s board of directors is made up of oligopolistic shareholders, which has few precedents in the banking industry of South Korea.
JB Financial Group reduced the shareholding ratio of Samyang, the largest shareholder, last year and attracted a large amount of investment from abroad through paid-in capital increase on the assumption of third-party allocation. As a result, its foreign shareholding ratio rose to 31.9% until the end of June this year and three investor directors have entered the nine-member board of directors. “We are focusing on the fact that JB Financial Group directors are showing a significant performance in the framework of the de facto oligopolistic shareholder-based governance structure,” said an executive at a financial company interested in the bidding.