Two provincial banking firms won the bid Tuesday to each buy a regional bank unit of Woori Finance Holdings Co., giving a hand to the government's long-pending sale of South Korea's largest banking group, ank and regulatory sources said.

   The state-run Korea Deposit Insurance Corp. (KDIC), the controlling shareholder of Woori Finance, picked Busan-based BS Financial Group Inc. as the preferred bidder for Kyongnam Bank, and JB Financial Group Co., based in the southern  city of Gwangju, for Kwangju Bank.

   The Financial Services Commission (FSC), the financial regulator in charge of the Woori sale, and the KDIC did not disclose details on the financial terms, but government officials familiar with the matter said BS Financial offered .2 trillion won (US$1.13 billion) and JB Financial 500 billion won for each bank.

   Kyongnam Bank and Kwangju Bank are one of the three batches the government has grouped together to divest Woori, worth 428.6 trillion won as of September, in its fourth attempt to place the banking giant in private hands.  

   The FSC said in late June it will sell Woori's 14 affiliates in parcels -- the two regional banks, brokerage unit Woori Investment & Securities Co. and other related arms, and the flagship Woori Bank -- by the end of next year.

   The state-owned Industrial Bank of Korea (IBK) and a consortium formed by a Busan business association and major Korean private equity firm MBK Partners were on the shortlist for Kyongnam Bank.

IBK has been selected as the contingent preferred bidder.

   Shinhan Financial Group Co., the fourth-largest banking group in Korea, vied with JB Financial for Kwangju Bank but lost the final bidding due to a lower bid. 

   The preferred bidders will sign a memorandum of understanding (MOU) in January, with a five-week due diligence to follow through before they clinch the deal in July, the FSC said.

   The FSC has insisted the "strictly highest bid" principle with the Woori sale, since the privatization is aimed at recouping the 13 trillion won bailout money it injected in the banking firm following the Asian financial crisis in the late 1990s.

   The government has come through in finding the viable buyer of the regional bank and brokerage units, raising the specter for the end of the sale in pending for more than a decade. It plans to sell Woori Bank early next year.

   Woori Finance was established in 2001 by merging five troubled banks. Since then, the KDIC has reduced its stake to a value of 11 trillion won. Its three previous sale attempts in the last four years failed due to a lack of buyers. (Yonhap news)