Chinese Money
China is emerging as a decisive factor in Woori Financial Group’s sale.
It was reported that China Investment Corporation (CIC) offered the highest bid for the sale of Woori Investment & Securities (I&S). In addition, Industrial and Commercial Bank of China (ICBC), the largest bank in the world, is reported to be interested in Woori Bank’s sale. Thus, Chinese financial institutions’ moves in the Korean market are receiving a lot of attention.
According to industry sources on October 28, ICBC is closely monitoring the progress of Woori Bank’s sale.
An official high in the financial industry commented, “There are not many local financial companies that afford to buy Woori Bank. To the best of my knowledge, Chinese banks with enough assets such as ICBC are considering the takeover of Woori Bank.”
Currently, the top five banks in China – Bank of China (BOC), ICBC, Bank of Communications (BOCOM), China Construction Bank Corp (CCB), and Agricultural Bank of China (ABC) – are operating in Korea.
According to the July 2013 issue of UK-based international financial affairs publication The Banker, ICBC was a top-ranked holder of Tier 1 capital amounting to US$160.6 billion, beating JPMorgan Chase & Co (US$160 billion), and Bank of America (US$155.5 billion). ICBC is also the world’s largest bank with assets of US$2.7889 trillion, and net profit before tax of US$49.1 billion.
With Woori Bank’s sale expected to begin next year, Kyobo Life Insurance is the only local financial company to show its willingness to buy the firm. However, Kyobo is not big enough to be the sole purchaser. Hence, a partnership with another foreign or local company is more likely.
Another Chinese financial institution is involved in the preliminary bidding for the sale of Woori I&S. It was reported that Korean company Pinestreet, which offered the highest bid, gets financial support from CIC. Japanese investment is presumed to have contributed to Pinestreet’s bidding as well. Since CIC manages assets of US$500 billion, the Chinese sovereign wealth fund is emerging as a major player in the global money and materials markets.
The high official concluded by saying, “Japanese money flowed into the Korean market by participating in lending loans or investing in savings banks. In comparison, Chinese capital of more than 20 trillion won [US$18.8 billion] flooded into bonds, real estate, and finally stocks. It seems that Chinese firms will actively seek to make investment here by using their sufficient assets.”