Shinhan Is Among Bidders for Woori Finance’s Regional Banks

South Korea received a first round of offers to buy Woori Finance Holdings Co.’s two regional banks as part of the government’s latest attempt to privatize the nation’s biggest financial group by assets.

Seven potential investors submitted preliminary bids for Woori’s Kwangju Bank unit and four made offers for Kyongnam Bank, Korea Deposit Insurance Corp. said by e-mail yesterday, without naming them. Shinhan Financial Group Co. said it made an offer for Kwangju and Industrial Bank of Korea said it was among the bidders for Kyongnam. The total stakes to be sold may be valued at about $2 billion, according to Kyobo Securities Co.

South Korea said in June that it will sell Woori’s assets separately after failing to attract buyers for its 57 percent stake three times since 2010. The government has lumped the assets into three groups as it tries to recoup taxpayer money spent more than a decade ago to bail out the weakest banks.

“The number of interested parties may signal smooth sailing for the first stage of Woori’s privatization,” said Sohn Joon Beom, an analyst at LIG Investment & Securities Co. in Seoul. “The government will be able to get enough bids to finally complete the sale” of the local lenders.

Shares of Woori Finance fell 0.4 percent to 12,600 won at the close of trading in Seoul. The stock has gained 6.8 percent this year compared with a 0.5 percent increase in the benchmark Kospi Index.

Private Equity

A consortium of private equity funds and businessmen based in Gyeongnam province submitted a preliminary bid for Kyongnam Bank, Yun Jong Soo, a spokesman for Changwon Chamber of Commerce & Industry, which represents the group, said by phone yesterday. A group of businessmen based in Gwangju city and Jeonnam province lodged an offer for Kwangju Bank, the Gwangju Chamber of Commerce & Industry said in an e-mailed statement.

DGB Financial Group Inc. submitted bids for both banks, as did BS Financial Group Inc., the companies said in separate regulatory filings today.

The government is seeking to sell 57 percent of each lender. Its Kyongnam Bank holding may be worth about 1.2 trillion won ($1.1 billion) and its stake in Kwangju Bank may be valued at about 1 trillion won, according to Hwang Seok Kyu, an analyst at Kyobo Securities. Prices may go up if competition intensifies, Hwang said.

Recouping Bailout

Kyongnam Bank, based in the southeastern industrial city of Changwon, had 31 trillion won of assets as of December, including 1.97 trillion won in equity capital, according to Financial Services Commission data. Kwangju Bank, based in the namesake southwestern city of Gwangju, had 20 trillion won of assets, including 1.34 trillion won in equity capital, the FSC, the regulator leading the asset sales, said at the time.

The regional banks were folded into Woori Finance in 2001 after the government created the holding company for lenders rescued after the Asian financial crisis in 1997-1998. The government spent 12.8 trillion won to bail out Woori and has recouped 5.7 trillion won through share sales including an initial public offering, the FSC said in June.

The government plans to name preferred bidders for the regional banks by the end of December and complete the sale by the first half of 2014 after spinning off the lenders from Woori Finance, the financial regulator said at the time.

Woori Finance last month asked for bids for its brokerage, asset management, savings bank and life insurance businesses, setting an Oct. 21 deadline for initial offers. Its flagship Woori Bank, credit card business and other units will be sold next year.

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