Woori Financial Group, Heading Toward 'Complete Privatization'?... Keen Attention on Today's Public Affairs Committee Discussion

[Asia Economy Reporter Kim Hyo-jin] The Public Fund Management Committee (PFMC) under the Financial Services Commission has drawn market attention as it began discussions on the sale of shares for the "complete privatization" of Woori Financial Group on the 22nd.

Due to the decline in Woori Financial Group's stock price amid the aftermath of the novel coronavirus disease (COVID-19), it is widely expected that proceeding with the sale according to the originally planned schedule will be difficult. The stock price needs to rise in order to sell shares at a higher price and thereby recover a larger amount of public funds.

According to financial authorities, the PFMC is scheduled to review the overall conditions related to the sale of Woori Financial Group shares and exchange opinions at a meeting set for 5 p.m. on the same day. A financial official explained, "It is unlikely that specific schedules or sale plans will be discussed and finalized," adding, "The meeting will be to check the stock price trends and market conditions."

The largest shareholder of Woori Financial Group is the Korea Deposit Insurance Corporation (KDIC), holding 17.25% of the shares. After the Asian financial crisis, the government injected 12.8 trillion won of public funds into Woori Financial during the financial company restructuring process. The financial authorities announced in June last year a plan to disperse and sell KDIC's shares in Woori Financial over two to three rounds from the first sale starting in the first half of this year through 2022.

At that time, Woori Financial's stock price was around 13,900 won. However, the situation worsened as the stock price fell to the 6,000 won range due to the impact of COVID-19 this year, causing the sale discussions to subside. The appropriate stock price for recovering public funds from Woori Financial is analyzed to be around 12,300 won. On the day, Woori Financial's shares opened at 9,229 won.

Regarding these circumstances, Financial Services Commission Chairman Eun Sung-soo stated at a press briefing on the 11th, "I considered whether it is more important to keep the promise despite the falling stock price or to recover a certain amount of public funds since public funds are the people's taxes."

A financial sector official said, "The speed of the government's sale of Woori Financial shares will ultimately depend on the decision made between the value of the promise made to the market and the weight of the taxes."

The official also predicted, "Physically proceeding with the first sale procedure within the first half of the year is difficult, so the PFMC will focus on discussions about the possibility of stock price recovery and the validity of readjusting the appropriate sale price."

Woori Financial has made efforts to boost its stock price through three rounds of share purchases by Chairman Sohn Tae-seung (15,000 shares) this year, but it is analyzed that there were limitations due to the prolonged impact of COVID-19. Some suggest that a bold decision by the government to step down from the position of largest shareholder could serve as a momentum for future stock price increases.

This content was produced with the assistance of AI translation services.