What Is the Appropriate Level? ... Woori Financial's Share Sale Extending Beyond the Year (Comprehensive)

Roadmap Set for 'Sale Starting This Year'
Delayed Due to Market Volatility Expansion and Others

[Asia Economy Reporter Kim Hyo-jin] The government's sale of shares to achieve the complete privatization of Woori Financial Group is expected to extend beyond this year. The government had planned to sell part of the shares held by the Korea Deposit Insurance Corporation (KDIC) in Woori Financial Group in the second half of this year depending on market conditions, but has been unable to make a decision due to increased volatility caused by the impact of the novel coronavirus disease (COVID-19) and continues to deliberate.

However, as Woori Financial Group's stock price, which had fallen to the 6,000 won range earlier this year, recently recovered to the 10,000 won level, there is growing anticipation that discussions on the sale will gain momentum early next year.

According to the financial investment industry on the 25th, as of 10:30 a.m. that day, Woori Financial Group's stock price stood at 10,200 won. The stock price dropped from around 11,000 won at the beginning of the year to about 6,300 won in March but has been steadily rising since then.

A financial sector official said, "Although the stock price was once shaken due to management uncertainties, the uncertainties have since been resolved, and expectations for portfolio expansion and business diversification following the acquisition of Aju Capital have been steadily reflected, resulting in a stable stock price trend." The anticipation of year-end dividends is also interpreted as influencing the stock price.

Researcher Eun Kyung-wan of Meritz Securities said, "While the profit improvement from the acquisition of Aju Capital is not significant, the fact that the non-bank lineup is being established is positive," adding, "Due to the base effect of poor performance, the profit improvement in 2021 is expected to be the highest among commercial banks."

The government injected 12.8 trillion won of public funds into Woori Financial Group during the financial company restructuring process following the 1998 International Monetary Fund (IMF) foreign exchange crisis. The stock price is the biggest variable in the government's share sale. Currently, KDIC holds 17.25% (approximately 124.6 million shares) of Woori Financial Group.

To fully recover the unrecovered public funds of about 1.53 trillion won, the stock price needs to be at least 12,300 won. Although it is not mandatory to meet this condition, the government believes it is necessary to consider an appropriate level that minimizes losses.

Continued Deliberation on 'Appropriate Level' to Minimize Losses

An official from the Public Fund Management Committee explained, "We are continuously monitoring market trends closely and reviewing appropriate stock prices and timing for the sale." It is known that the committee did not reach any conclusion at a recent meeting. The government had initially presented a roadmap to sell Woori Financial Group shares in two to three rounds from this year through 2022.

A government official said, "The possibility of starting the first sale within this year is not low." KDIC has included revenue from the sale of Woori Financial Group shares in next year's budget plan. According to the National Assembly Budget Office, KDIC allocated 382.316 billion won in revenue from the sale of inventory assets in its 2021 plan, of which 319.098 billion won is expected to come from Woori Financial Group.

Within the financial sector, there are voices suggesting the need to consider various options, including starting the sale even if the scale of the first sale is reduced.

A financial sector official pointed out, "The delay in the government's share sale itself is a factor of uncertainty, but conversely, initiating the share sale could act as a factor for future stock price increases, so it is necessary to consider more diverse and proactive measures."