By Park Bo-ram
SEOUL, July 30 (Yonhap) -- The privatization of the state-controlled Woori Finance Holdings Co. is expected to gather momentum as the government unveiled a long-awaited plan to sell its controlling stake in the nation's No. 2 financial services company, analysts said Friday.
After a month-long delay, the Public Fund Oversight Committee, which oversees public fund management, announced earlier in the day it will embark on unloading a 57 percent government share in the country's second-largest banking group.
The public-private joint committee, commissioned by the government to put companies bailed out by taxpayers' money back into private hands, seeks to offload part or all of the total state interest by the first half of next year.
If sealed, the latest transaction would mark the government's complete departure from the local banking sector after it acquired a handful of lenders in the aftermath of the 1997-1998 Asian financial crisis.
Woori Finance has remained in the government's hand for over a decade after being injected with 12.8 trillion won (US$10.8 billion) in public funds in 1998 and restructured into the current holding firm entity through a consolidation with a handful of financial companies.
The country's previous attempts to exit its stake failed due to the eruption of the financial crisis in 2008, but this time it expressed the stern determination to transfer the group into a private hand.
"Given about 10 years have passed since the injection of the public money, the privatization of Woori Finance is a task that can no longer be delayed," the public fund watchdog said in a statement.
The delayed transaction has set off skepticism over the government's willingness to set free its banking control as well as questions on the effectiveness of the domestic banking sector.
Analysts say a banking consolidation could boost bank profitability by easing the fierceness of competition, blamed as the major culprit eroding bank earnings.
"Various studies show big mergers and acquisitions generally tend to improve bank profitability by subduing competition in the short haul," Koo KH, an analyst at Hyundai Securities said.
An emergence of a megabank with assets of at least over 500 trillion won is widely anticipated among market participants, who say the government seems to be eager to sell off its Woori Finance control.
The government indicated it could proceed with a deal if a prospective buyer acquires only a 28-30 percent stake, the minimum needed to guarantee the management of Woori Bank.
"The stance signals much-eased government standards and has sort of made it possible for Hana Financial Group Inc. to tap the deal," Koo said.
Hana Financial, with assets of a little less than 200 trillion won, has openly expressed its interest in buying up Woori Finance, which has over 300 trillion won in assets.
KB Financial Group Inc., the top banking player, was also believed to be interested in the deal, but rising criticism over the group's low profitability has kept its chairman from openly pursuing a big deal.
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