Regulator to retain Woori sale plan despite failed rule change

SEOUL, June 21 (Yonhap) -- South Korea's financial regulator said Tuesday it will stick to its plan to sell a major stake in state-run Woori Finance Holdings Co. despite its recent decision to effectively bar financial holding firms from bidding.
The Financial Services Commission (FSC) recently withdrew its plan to revise financial holding company regulations in order to lower the barrier for local banking groups to bid for the 56.97 percent stake in Woori Finance, the second-largest local financial holding company by assets.
Despite the cancellation of the plan to drive down the minimum share that financial holding firms need to acquire to control a peer company from 95 percent to 50 percent, the FSC will not divert from its original schedule to accept letters of intent to buy the major stake by June 29, FSC vice chairman Shin Je-yoon said in a meeting with foreign correspondents.
The regulator had said it plans to pick a preferred bidder by September.
His remarks came amid mounting skepticism over the success of the Woori Finance sale, triggered by the plan scrapping that disqualifies state-owned KDB Financial Group Inc., an avid hopeful buyer, from bidding for the stake.
"Foreign bank holding firms or private equity funds could bid for it," Shin said, referring to criticism that the cancellation may lead to a lack of investor interest.
On Monday, the vice chairman was quoted by lawmakers as saying in the National Assembly that the FSC will drop the plan to revise regulation if lawmakers keep opposing it.
Media and lawmakers have strongly criticized the FSC's regulatory revision move, saying it will only pave the way for state-owned KDB Financial to utilize public finance in order to take over another state-run financial institution.
In his 2008 election campaign, President Lee Myung-bak promised to privatize a handful of state-run companies including Woori Finance, which was saved from a bankruptcy with taxpayers' money.
The FSC's 2010 efforts to find a private owner for Woori Finance broke up due to lukewarm investor interest.
pbr@yna.co.kr