Bank Examination Bureau Finalizing the Review
Could Be Delivered to the Supervision Bureau as Early as This Week
"Decision Will Be Made in March No Matter What"
High Possibility of Woori Financial Group Receiving Grade 3
Insurance Company Acquisition Still Possible Even with Grade 3
The Financial Supervisory Service (FSS) plans to decide the management evaluation grade for Woori Financial Group as early as this weekend and deliver the grade to the Financial Services Commission (FSC) and Woori Financial by March 28 at the latest.
On the 11th, a senior official in the financial industry hinted, "The FSS has set a policy to deliver Woori Financial Group's management evaluation to the FSC and the holding company by the end of March at the latest."
Woori Financial Group submitted an application to the financial authorities in January to incorporate subsidiaries Dongyang Life Insurance and ABL Life Insurance. According to the Financial Holding Company Supervision Regulations, a financial holding company must receive a management evaluation grade of 2 or higher to incorporate subsidiaries.
Currently, the Bank Examination Bureau of the FSS is finalizing the management evaluation of Woori Financial Group. Once the Bank Examination Bureau delivers the related information to the Bank Supervision Bureau, the Bank Supervision Bureau will decide the grade. Subsequently, the FSC will make the final decision on the approval of the insurance companies.
The financial industry expects Woori Financial Group to receive a grade 3. This year, the weighting for the 'internal control' evaluation item increased from 5% to 15%. Due to the improper loan incident related to the former chairman, receiving a grade 2 is considered practically difficult.
However, even if Woori Financial Group receives a grade 3, it can still acquire the insurance companies. If the FSC determines that the requirements such as capital increase and disposal of non-performing assets are met based on the Financial Holding Company Act, incorporation approval is possible.
Some speculate that even if Woori Financial Group receives a grade 3, the score difference from a grade 2 holding company may not be significant. This is because the FSS internally subdivides management evaluation grades into plus (+), zero (0), and minus (-) categories.
A financial industry official said, "Most financial holding companies that received grade 2 are 'grade 2 minus,' scoring 2 to 3 points higher than the grade 3 cutoff (70 points). Even if Woori Financial Group receives grade 3 due to deductions in the internal control category, the actual score difference may be small."
An FSC official stated, "Once we receive the management evaluation grade from the FSS, we will review it according to laws and procedures."
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