Woori Units to Be Split in Government’s Fourth Sale Attempt

South Korea will separate Woori Finance Holdings Co. (053000)’s businesses into three parts in the government’s fourth attempt to sell the nation’s biggest financial group by assets.

The Public Fund Oversight Committee, which oversees sales of state assets, plans to put provincial lenders Kwangju Bank and Kyongnam Bank up for sale on July 15, according to an e-mailed statement from the Financial Services Commission. Bidding for Woori’s brokerage, asset management and savings bank businesses will begin in August. Woori Bank, along with the credit card and other units will be sold next year, it said.

South Korea is reviving the sale of its stake in Woori Finance, valued at 4.5 trillion won ($3.9 billion), after failing to garner buyer interest in the three auctions held since 2010. The government welcomes bids from both foreign and local investors, FSC Chairman Shin Je Yoon told reporters today in Seoul, adding that it is undecided on how large the Woori Bank stake sale will be.

“The possibility of a successful sale is very high this time since the government showed a specific plan on how to separate the businesses,” Lee Byung Gun, an analyst at Dongbu Securities Co. in Seoul said in a telephone interview.

Woori Investment & Securities Co. (005940) along with the company’s asset management unit and savings bank will be sold separately or as packages, following a board meeting in July, the FSC said in today’s statement.

Potential Bidders

Shares of the Seoul-based Woori Finance jumped as much as 3.9 percent to 10,250 won and traded at 10,200 won on the Korea Exchange as of 11:13 a.m. The benchmark Kospi Index was unchanged.

Potential bidders have already expressed interest in Woori’s units, PFOC Chairman Nam Sang Koo said at a press briefing, declining to identify them.

Kyobo Life Insurance Co. was reported to be studying a possible takeover of Woori’s provincial bank units, Maeil Business Newspaper said yesterday, citing unidentified Kyobo and financial industry officials.

BS Financial Group Inc. (138930), which owns Busan Bank, is interested in acquiring Woori Finance’s Kyongnam Bank unit, Moon Kyung Ho, general manager of BS Financial’s strategy planning division, said in an interview with Bloomberg News last month.

“We need to privatize Woori as soon as possible in order to improve its competitiveness,” Shin said. “Selling the units separately will help accelerate the sale as it will lower buyer’s costs for each deal.”

In the last sale attempt, bidders were required to buy more than 30 percent of Woori as a whole, according to the PFOC. Daewoo Securities Co., JPMorgan Chase & Co. and Samsung Securities Co. were hired in September 2010 to help sell the stake.

Woori Finance was created in 2001 as a holding company for lenders rescued by the government after the Asian financial crisis in 1997-1998, as part of a push to make the banking industry more competitive. The holding company contains Woori Bank, Kwangju Bank, Kyongnam Bank and Woori Credit Card.

To contact the reporters on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net; Yewon Kang in Seoul at ykang51@bloomberg.net

To contact the editor responsible for this story: Stanley James at sjames8@bloomberg.net

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