Woori Financial Group Achieves Full Privatization... Non-Bank M&A Accelerates

Independent Participation of Outside Directors Recommended by Major Shareholders in Management
Accelerating M&A to Strengthen Insufficient Business Portfolio

[Asia Economy Reporter Park Sun-mi] Woori Financial Group has succeeded in full privatization 23 years after the injection of public funds, accelerating mergers and acquisitions (M&A) that can strengthen its lacking business portfolio. The structure has changed to focus more on stakeholders, including shareholders, raising high expectations that Woori Financial Group's efforts to reinforce its non-bank sector portfolio will proceed in earnest.

According to the Public Fund Management Committee (PFMC) under the Financial Services Commission on the 22nd, the sale procedure of the remaining shares held by the Korea Deposit Insurance Corporation (KDIC) will be completed by next month 9th, finalizing the payment receipt and stock transfer procedures with five successful bidders: Eugene Private Equity (Eugene PE), KTB Asset Management, Align Partners, Dunamu, and Woori Financial Group's employee stock ownership association. Going forward, the PFMC plans to promptly complete the sale of the remaining shares held by KDIC, considering future stock price trends and supply-demand conditions at the time of sale.

Upon completion of the sale, Woori Financial Group's major shareholders will be the employee stock ownership association (9.80%), National Pension Service (9.42%), and KDIC (5.8%). The oligopolistic shareholders holding one outside director nomination right each will consist of IMM PE (5.57%), Eugene PE (4%), Korea Investment & Securities (3.77%), Kiwoom Securities (3.73%), Hanwha Life Insurance (3.16%), and Fubon Life Insurance (3.97%).

With private shareholders, not KDIC, becoming the largest shareholders, Woori Financial Group is expected to accelerate business diversification driven by shareholder-centered management. Outside directors recommended by the oligopolistic shareholders will participate independently in management, striving to enhance corporate value.

Coinciding with this, earlier this month, Woori Financial Group succeeded in obtaining approval for the 'Internal Ratings-Based Approach,' a long-awaited project, raising the Basel International Settlement Bank (BIS) capital adequacy ratio by about 1.3 percentage points, providing more flexibility in fund utilization. Based on the increased capital, Woori Financial Group is expected to aggressively pursue M&A in non-bank sectors such as securities and venture capital (VC). Woori Financial Group has been criticized for having a weak non-bank sector portfolio compared to other financial holding companies.

The top priority M&A targets are likely to be securities firms or venture capital (VC) companies. Having successfully completed mergers and acquisitions of capital and savings banks last year, acquiring securities firms, VCs, and insurance companies would complete Woori Financial Group's non-bank sector portfolio.

Lee Sung-wook, Executive Director of Woori Financial Group's Finance Division, also stated during a conference call following the third-quarter earnings release, “With the approval of the Internal Ratings-Based Approach, the capital size will increase by about 2 trillion won, and there will be about 20 trillion won of room based on risk assets. Since the lineup as a comprehensive financial group is still incomplete, we are considering acquiring securities firms, venture capital (VC), and establishing a company specializing in non-performing loans (NPL).”

Meanwhile, the public funds injected into Woori Financial Group are expected to recover approximately 897.7 billion won through this remaining share sale process. If the remaining shares (5.8%) are sold at 10,193 won or more, the entire public funds invested in Woori Financial Group can be recovered. Having effectively succeeded in full privatization, the discount factor of being a government-owned financial holding company disappears, increasing the likelihood that the remaining shares held by KDIC will generate additional profits and improve the recovery rate.

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