RETAIL BANKING | Tony Chua, Korea

South Korea regulator bars KDB from Woori bidding

FSC takes note of financial investors’ concern that the formation of a giant state bank could reverse competitiveness of South Korea’s banking sector.

Seoul’s regulators will not allow state-run Korea Development Bank to bid for the government’s $6bn controlling stake in Woori Financial Group, the country’s biggest lender, because of a lack of public support.

The regulators’ decision ends speculation that KDB, viewed as the frontrunner in the deal, could acquire Woori in order to form a state “megabank”. Several prominent South Korean policymakers have suggested Seoul should forge a heavyweight domestic lender to support industrial conglomerates such as Samsung, Hyundai and LG.

However, Kim Seok-dong, chairman of the Financial Services Commission, said on Monday such an acquisition would be unwise.

“We have ruled it desirable that KDB not bid for Woori owing to a lack of public consensus,” he told lawmakers.
South Korea’s parliamentarians, Woori’s union and the national press have criticised a potential KDB-Woori tie-up.

The critics have argued that Lee Myung-bak, South Korea’s president, is using his friend and former finance minister, Kang Man-soo, who is now chairman of KDB, to push through the creation of a megabank.

As an industrial lender, KDB had some natural synergies for merging with Woori, which has a far greater high-street presence. But financial investors have also complained the formation of a giant state bank could reverse South Korea’s commitment to make its banking sector more competitive.

View the full story in Financial Times.

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.