S. Korea renews sale process for Woori Finance

(ATTN: ADDS more details in para 4, 8, 14)
SEOUL, May 17 (Yonhap) -- South Korea announced a much-awaited road map for the sale of Woori Finance Holdings Co. on Tuesday, restarting the stalled process for privatizing the country's second-biggest financial group by assets.
The Public Fund Oversight Committee, which handles state asset sales, suspended its process to sell the 56.97 percent government stake in Woori Finance last December due to a lack of investor interest.
"We decided to restart the stalled sale in order to quell market uncertainties and keep sale momentum afloat," committee co-chairman Min Sang-ki said in a press briefing, referring to the state-owned share worth 6.3 trillion won (US$5.8 billion) by market value.
The Korea Deposit Insurance Corp., the deposit insurer holding the state stake, will make public the restart of the sale on Wednesday and accept letters of intent to bid for the stake by June 29, the committee said, adding a preferred bidder will be selected by September.
A buyer is required to bid for a minimum 30 percent share, according to the committee. The limit is higher than the 4 percent minimum imposed in the previous sale attempt, a change aimed at locating a long-term owner of Woori Finance, Min said.
The public fund watchdog also said it will push to sell all Woori Finance subsidiaries, including two regional banks and the brokerage unit Woori Investment & Securities Co., to a single buyer.
In a bid to draw more potential buyers, the Financial Services Commission will review a regulatory revision to allow financial holding firms to join the takeover race, the financial regulator noted.
"We gathered reports that the regulation needs to be relaxed in order to broaden the condition for competition," the chairman said.
Through the revision, financial holding firms will reportedly be allowed to control another financial holding firm with a minimum 50 percent stake, relaxing from the current limit of 95 percent, the committee said.
The rule change is expected to lure gigantic financial holding firms like state-run KDB Financial Group Inc. and KB Financial Group Inc., the country's biggest financial holding firm.
KDB Financial reportedly tops the list of potential buyers after Chairman Kang Man-soo flagged earlier in May his intention to jump into the takeover race.
KBD Financial's takeover of Woori Finance would make the consolidated entity the biggest local financial group by far with combined assets of about 500 trillion won. KB Financial's assets stood at 344 trillion won, and Shinhan Financial holds 328.6 trillion won.
President Lee Myung-bak vowed as part of his election campaign to privatize Woori Finance and other state-owned firms that were rescued from bankruptcies with taxpayers' money in the aftermath of the 1997-98 Asian financial crisis.
The government pumped 12.8 trillion won in taxpayers' money into financial firms that later merged into Woori Finance, and recovered 5.4 trillion won as of the end of 2010.
The new sale method, meanwhile, is expected to trigger public controversies over whether it could help the country recoup public funds used to salvage the financial firm, the main goal of the Woori Finance sale efforts.
Woori Finance showed cold reactions to the road map after pulling back its intention to buy the stake in last year's sale attempt due to high premium costs needed to buy the stake. Two consortia, each led by Woori Finance's employees and customers, had submitted letters of intent.
"KDB Financial's takeover of Woori Finance is a behavior that cheats people, as it virtually means using government finance by the government-owned firm to redeem public funds," Woori Finance said on Monday in response to KDB Financial's takeover blueprint reported the same day.
pbr@yna.co.kr