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Woori Bank set to buy Kyobo Securities

Woori Bank CEO Sohn Tae-seung answers questions regarding the lender's updated business strategies in a recent press conference held in the bank's headquarters in downtown Seoul in this file photo. Korea Times file

By Kim Yoo-chul

Woori Bank, the country's top-tier private lender, is in discussions with Kyobo Life Insurance to take over controlling stakes in Kyobo Securities, a deal estimated to value around $300 million (320 billion won), sources at two local private equity funds (PEFs) said, Wednesday.

Kyobo Life Insurance is the largest shareholder of Kyobo Securities, owning 51.6 percent in the domestic brokerage firm.

"Woori Bank filed a letter of intent with Kyobo Life Insurance to purchase a full stake in Kyobo Securities ahead of the bank's expansion into non-banking businesses. Woori asked a local PEF to handle the negotiation as the country's financial regulators are still investigating Woori Financial Group over hiring irregularities. Once the investigation is over, then Woori will take control of the merger talks," a senior executive at a local PEF said by telephone.

Regarding the acquisition price, the executive said Kyobo Life was hoping to sell up to 370 billion won of its holdings, including a management premium with Woori, setting 320 billion won as its "best bet" for the acquisition.

The Financial Services Commission (FSC), the country's top financial regulator which oversees all financial policies, is acknowledged in this issue.

"As far as I know, Woori Bank is reviewing scenarios before adopting a holding company system," FSC Chairman Choi Jong-ku told reporters in an industry forum. The senior government official, however, declined to elaborate.

Kyobo Life confirmed its plan to unload its holdings in the brokerage firm. But the insurer declined to name the bidders it was talking to, citing the sensitivity of the issue.

Woori had tried purchasing Samsung Securities, HI Investment & Securities and Yuanta Securities, though the efforts failed to materialize despite the lender's continued interest in diversifying its portfolio with non-banking businesses.

Another source from the other local PEF said Woori is taking "the issue very seriously" as the bank's CEO Sohn Tae-seung is keen on ramping up mergers and acquisitions in order to find new growth markets.

"The point is the FSC will approve Woori's plan to adopt a holding company system. Under the holding company structure, Woori has no legal issues to expand its business to non-banking sectors and the bank earlier had a securities firm under its wing. Woori and Kyobo Life will benefit if the deal is closed as Kyobo Life is under pressure to improve its soundness ahead of the implementation of the IFRS17 standard," the second source said.