Woori Financial Group to Acquire Tongyang Life and ABL Life... Capital Management Implementation to Be Reported Semiannually

Approval Granted After 3 Months and 17 Days of Review Application
No Legal Issues Found with Conditional Approval
Most Corrective Actions from Inspections Completed
Foundation Laid for Becoming a Comprehensive Financial Group

The Financial Services Commission has conditionally approved the incorporation of Tongyang Life Insurance and ABL Life Insurance as subsidiaries of Woori Financial Group, on the condition that Woori Financial Group reports improvements in internal controls and capital management. This conditional approval was granted because there were no legal issues and most of the corrective actions required by the Financial Supervisory Service had been completed. As a result, Woori Financial Group has now laid the groundwork to become a comprehensive financial group by acquiring Woori Investment & Securities and insurance companies.

On May 2, the Financial Services Commission held its 8th regular meeting at the Government Complex Seoul and approved the incorporation of these subsidiaries into Woori Financial Group. This decision was made on the condition that Woori Financial Group submits reports on its internal control improvement plan and mid- to long-term capital management plan to the financial authorities every six months until the end of 2027.

Even an ad-hoc subcommittee was convened... Conditional approval granted after 3 months and 17 days

Woori Financial Group applied for approval to incorporate Tongyang Life and ABL Life as subsidiaries on January 15. Previously, concerns were raised about the acquisition after the Financial Supervisory Service's management status evaluation rated the group at grade 3. In principle, financial holding companies rated below grade 2 in the management status evaluation have difficulty obtaining approval for subsidiary incorporation. In such cases, conditional approval is possible at the discretion of the financial authorities, which is why the agenda review subcommittee was convened multiple times in an unusual manner.

The financial authorities reviewed until last month whether the business plan was feasible and sound, and whether the financial holding company and its subsidiaries met the requirements for subsidiary incorporation under the Financial Holding Companies Act, including the soundness of their financial and management status. During this process, the authorities requested Woori Financial Group to supplement materials related to the review of subsidiary incorporation requirements, and also consulted with the Fair Trade Commission to determine whether the incorporation would substantially restrict competition in the market.

The Financial Services Commission held four agenda review subcommittee meetings, including ad-hoc meetings, considering the need for Woori Financial Group to promptly address capital management for Tongyang Life and ABL Life.

No legal issues with conditional approval... Most corrective actions from inspections have been completed

The main issues were: ▲ the sound management status of the financial holding company, ▲ plans to address findings from inspections, and ▲ implementation of internal control improvement plans. First, the Financial Services Commission concluded that although Woori Financial Group received a grade 3 rating, its management status could be considered sound.

The Financial Services Commission explained, "(Regarding the conditional approval) the relevant regulation is not limited to financial measures. The intent of the regulation is to consider the potential for future improvement, and the management status evaluation for financial holding companies includes not only financial items but also other factors. All of these were comprehensively considered."

It was also stated that there were no major issues with the corrective action plans for inspection findings and internal control improvements. This is because most of the required improvements requested by the Financial Supervisory Service had been completed. For some tasks that require more time, such as system and model development, Woori Financial Group presented a detailed implementation schedule and directly explained its own internal control improvement plan and mid- to long-term capital management plan, including capital expansion.

Woori Financial Group stated, "Of the total 21 action items required by the management status evaluation, 17 have been completed, and the remaining 4 items, which require the development of provisioning methodologies through consulting, will be completed as soon as possible."

Woori Financial Group must report to the financial authorities every six months... Expresses commitment to becoming a comprehensive financial group

Lee Bokhyun, Governor of the Financial Supervisory Service (right), and Lim Jongryong, Chairman of Woori Financial Group (center), are attending the business agreement ceremony for the training and capacity building of outside directors among the Financial Supervisory Service, Korea Institute of Financial Training, Korea Federation of Banks, and financial holding companies at the Korea Institute of Financial Training in Samcheong-dong, Seoul, on February 13, 2025, and are having a conversation. Photo by Cho Yongjun

In consideration of these factors, the Financial Services Commission approved the incorporation on the condition that Woori Financial Group reports the implementation status of its internal control improvement plan to the Financial Supervisory Service every six months until 2027. The Financial Supervisory Service must review these reports and report to the Financial Services Commission once a year.

If, as a result of these reviews, Woori Financial Group fails to faithfully implement its internal control improvement plan or other requirements, a corrective order may be imposed under Article 57, Paragraph 1 of the Financial Holding Companies Act. If the corrective order is not implemented, a stock disposal order may be imposed under Article 57, Paragraph 2 of the Financial Holding Companies Act.

Woori Bank stated regarding the approval of the subsidiary incorporation, "We will faithfully implement the innovation measures going forward," and added, "Woori Financial Group will now foster Tongyang Life and ABL Life into sound and innovative insurance companies based on strong internal controls and stable capital management."

They further stated, "Based on the established business plan, we will conduct a deeper analysis of the company's profit structure and business foundation, reorganize with effective implementation plans, and proceed with substance," adding, "We will strive to become a truly comprehensive financial group by strengthening capital soundness and expanding group-level synergies."