ID :
182889
Wed, 05/18/2011 - 12:34
Auther :
Shortlink :
https://oananews.org//node/182889
The shortlink copeid
State-run megabank not desirable
(Yonhap Editorial) SEOUL, May 18 (Yonhap) -- The process of selling the state-owned Woori Finance Holdings Co. is likely to be restarted as the government announced a road map for the sale on Tuesday.
The Public Fund Oversight Committee, which handles state asset sales, said it will restart the stalled sale of the 56.97 percent government stake in Woori Finance worth 6.3 trillion won (US$5.8 billion) by market value in order to quell market uncertainties and keep sale momentum afloat.
The Korea Deposit Insurance Corp., the deposit insurer holding the state stake, will accept letters of intent to bid for the stake by June 29 and will select a preferred bidder by September, the committee said.
The government suspended the process to sell the gigantic financial holding company with assets of 346 trillion won last December due to a lack of investor interest.
The prospects for the sale are still unclear, though. Leading financial holding companies like Hana Financial, KB Financial and Shinhan Financial are reportedly in a difficult position to buy Woori. Only state-run KDB Financial has expressed a strong intention at present.
So there is speculation that the government has KDB Financial in mind as a buyer of Woori, which is contrary to the original goal of the privatization of Woori.
The committee hiked the requirement to become a bidder for Woori to buying a minimum share of 30 percent, up from the 4 percent minimum imposed in the previous sale attempt, which is also suspected as a government scheme to pave the way for KDB Financial to buy the stake. The total market capitalization of Woori is estimated at 11 trillion won. Therefore, any candidate should invest at least 3.3 trillion won to bid for Woori, which would make KDB Financial virtually a sole potential bidder.
KBD Financial's takeover of Woori Finance, if realized, 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 344.8 trillion won, and Shinhan Financial holds 328.6 trillion won.
There is sharp controversy over the KDB-Woori merger, which would create a state-run megabank. A Woori-KDB merger will strengthen the government's influence in the domestic banking market, critics worry. The merged bank would control more than half of the domestic corporate banking market, they said.
Another problem is that KDB Financial, which has no experience of operating a commercial bank, is likely to weaken Woori's market competitiveness.
There is also criticism that KDB's takeover of Woori cannot recoup public funds injected to salvage the financial firm, which is the main goal of the Woori Finance sale efforts. 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.
Considering past evils of the government's control of the financial industry and lax management in state-owned banks, we cannot but say that the creation of a state-run megabank is not desirable.
The Public Fund Oversight Committee, which handles state asset sales, said it will restart the stalled sale of the 56.97 percent government stake in Woori Finance worth 6.3 trillion won (US$5.8 billion) by market value in order to quell market uncertainties and keep sale momentum afloat.
The Korea Deposit Insurance Corp., the deposit insurer holding the state stake, will accept letters of intent to bid for the stake by June 29 and will select a preferred bidder by September, the committee said.
The government suspended the process to sell the gigantic financial holding company with assets of 346 trillion won last December due to a lack of investor interest.
The prospects for the sale are still unclear, though. Leading financial holding companies like Hana Financial, KB Financial and Shinhan Financial are reportedly in a difficult position to buy Woori. Only state-run KDB Financial has expressed a strong intention at present.
So there is speculation that the government has KDB Financial in mind as a buyer of Woori, which is contrary to the original goal of the privatization of Woori.
The committee hiked the requirement to become a bidder for Woori to buying a minimum share of 30 percent, up from the 4 percent minimum imposed in the previous sale attempt, which is also suspected as a government scheme to pave the way for KDB Financial to buy the stake. The total market capitalization of Woori is estimated at 11 trillion won. Therefore, any candidate should invest at least 3.3 trillion won to bid for Woori, which would make KDB Financial virtually a sole potential bidder.
KBD Financial's takeover of Woori Finance, if realized, 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 344.8 trillion won, and Shinhan Financial holds 328.6 trillion won.
There is sharp controversy over the KDB-Woori merger, which would create a state-run megabank. A Woori-KDB merger will strengthen the government's influence in the domestic banking market, critics worry. The merged bank would control more than half of the domestic corporate banking market, they said.
Another problem is that KDB Financial, which has no experience of operating a commercial bank, is likely to weaken Woori's market competitiveness.
There is also criticism that KDB's takeover of Woori cannot recoup public funds injected to salvage the financial firm, which is the main goal of the Woori Finance sale efforts. 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.
Considering past evils of the government's control of the financial industry and lax management in state-owned banks, we cannot but say that the creation of a state-run megabank is not desirable.
