Customers use ATMs at a Woori Bank branch in Seoul (Reuters)
Woori Financial Group’s privatization plan, which has been stalled due to the novel coronavirus outbreak here coupled with its plunge in stock price, is likely to move forward again, on account of its recent stock price recovery, government sources said Wednesday.
The Public Fund Oversight Committee under the policymaking Financial Services Commission, overseeing Woori’s privatization, plans to discuss the sell-off of the state-run Korea Deposit Insurance’s stake in Woori in the upcoming meeting scheduled June 22, sources said. This issue was reportedly not on the agenda at the committee’s previous meeting, held May 25.
The government’s initial plan to start offloading KDI’s 18.32 percent stake in the financial holding company over the course of three years, starting from the first half of 2020, was apparently halted when Woori’s stock prices started plummeting below 10,000 won ($8.40) in late January and eventually dropping to 6,320 won on March 20.
Woori’s stock value stood at 14,500 won on June 20 last year, when the government first announced its privatization plans. The stable price supported optimistic views that the government may be able to collect back all of the 12.8 trillion won it pumped into the banking group to provide a cushion from the blows of the 1997 Asian financial crisis.
After acquiring 100 percent stake in Woori in 2001 through the investment, it sold off its stake to other current shareholders, including the National Pension Service and employee stock ownership association, which hold 8.37 percent stake and 6.39 percent stake, respectively.
So far, the government has recovered 11.1 trillion won out of the 12.8 trillion won it funneled into the bank nearly two decades ago.
But when Woori’s stock value started plunging early this year -- weighed down by risks stemming from COVID-19 and leadership issues -- the government turned hesitant on implementing its plan on the initial time frame on apparent concerns of weak returns. The FSC’s decision to punish Woori Financial Group Chairman Sohn Tae-seung earlier this year rattled the banking group’s governance and Sohn’s position, affecting the group’s share price.
FSC Chairman Eun Sung-soo expressed worries on the initial time frame during a parliamentary policy committee meeting in February, saying “there have been existing concerns as the matter is related to the struggling market and parts related to re-collecting public funds.”
Woori’s share price needs to be around 13,000 won for the government to collect a sufficient amount of the remaining funds of around 1.6 trillion won.
Woori Financial Group traded at 9,830 won per share Wednesday, slightly lower than the closing price of 9,850 won on Tuesday.
A Woori official told The Korea Herald that the banking group has yet to hear the financial authorities’ plans on the matter.
By Jung Min-kyung (
mkjung@heraldcorp.com)