Woori Bank Co., South Korea's third-largest commercial bank, has officially announced that it would turn itself into a holding company by early next year. When the process is completed as planned, the bank will be returning to a holding company structure again in five years.
The bank said on May 20 that it would discuss the proposed transition with interested parties, including its board of directors, financial authorities and the Public Fund Oversight Committee.
Woori Bank is the only company among major banks in South Korea that is not under a holding company structure.
The bank had been under a holding company system until Woori Finance Holdings was merged into Woori Bank in 2014 in the privatization process.
Under the current regulations, the bank is prevented from expanding its business to non-banking sectors as it is not under a holding company system. This was why Lee Kwang-goo, former president of Woori Bank, pushed ahead with the conversion into a holding company. However, the process has been halted after Lee offered to resign to take responsibility for the unfair recruitment scandal at the bank.
Once converted to a holding firm structure, Woori Bank will be able to expand its business portfolio to the non-banking sectors as the limit on total investment will be raised. This would enable the bank to offer customized asset management services and other services through its non-bank affiliates.
An official from Woori Bank said, “When the bank turns into a holding company, it will be able to invest in a wide range of profitable businesses, including securities, asset management and real estate trust, which would improve capital efficiency and raise the company's value.”
To complete the conversion, the bank need to get the green light from the board of directors before submitting an application to financial authorities and gaining the approval of shareholders.