Opposition party against revising law on financial holding firms
The sale of state-run Woori Financial Group faces a significant showdown this week as to whether financial authorities can gain the momentum needed to push for the revision of laws on financial holding companies.
The Financial Services Commission is considering proposing a revision to a bill allowing a financial group to own another financial group by acquiring a greater than 50 percent stake, from the current requirement for holding a 95 percent stake.
The FSC’s decision will likely be affected by discussion on the issue among lawmakers of the National Policy Committee, slated for Tuesday.
A large portion of lawmakers in the main opposition Democratic Party reportedly oppose the move.
They allege that the financial authorities are striving to select the state-run KDB Financial Group as the preferred bidder for Woori Financial through a law revision.
As several lawmakers of the governing Grand National Party have also expressed their skepticism over the move, the meeting of National Policy Committee members is drawing close attention from the markets.
If GNP lawmakers ― in contrast to the opposition ― reaches the consensus not to veto a possible revision motion, there is a high possibility that the FSC will map out a more concrete plan to push for the revision.
A regular meeting of the FSC’s decision-making panels will be held Wednesday.
But should the result of the lawmakers’ discussion be unfavorable to the authorities, the “mega-bank” theory pushed by KDB Financial chairman Kang Man-soo, a close confidant of President Lee Myung-bak, could sink below the surface.
Further, though FSC Chairman Kim Seok-dong has stressed that he would induce competition among potential investors for the planned bidding of Woori Financial, there is no financial group, excluding KDB Financial, which has expressed interest.
“I think each financial group has no choice but to be alert over possible risks from establishing a mega-bank under a merger with Woori Financial,” a local commercial banker said.
He said the more urgent issue for major financial groups, such as KB, Shinhan and Hana, would be raising profitability by slashing uncompetitive units.
In addition, Kim has clarified that the authorities will hand over the state-run financial group to a Korean bidder.
His remarks came during the FSC’s earlier report to the National Assembly on the financial authorities’ planned sale of Woori Financial in which taxpayers’ money was injected for business normalization.
While the portion of foreign stakes in most of the nation’s commercial banks has increased sharply, Woori Bank, the flagship unit of Woori Financial, has been regarded as the last bastion.
By Kim Yon-se (email@example.com