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| Woori Financial Group headquarters in Seoul / Yonhap |
Woori Financial Group is facing growing pressure to re-acquire a brokerage license to bolster its non-banking business and further boost its stock price, amid the government's accelerated attempts to completely privatize the banking group.
Last Friday, the Korea Deposit Insurance Corp. (KDIC) unloaded 2 percent of its stake in Woori for 149.3 billion won ($134 million), lowering its overall ownership in the group to 15.25 percent. This was the state deposit insurer's first divestment from Woori following a government announcement in June 2019 that it would recoup all taxpayer money injected into the group by 2022.
The KDIC seems to have taken advantage of the recent hike in Woori's stock price, which reached a 52-week high of 10,850 won, Wednesday. The government's divestment plan was delayed last year because the stock price remained below 10,000 won after June.
However, the share price needs to go up further and surpass 12,000 won for the government to avoid a loss. Securities analysts regard Woori's reacquisition of a brokerage license as key to the government achieving that goal, because it will enhance the group's earnings from non-banking operations.
Woori was the only financial holding company that saw an earnings decline last year. Its rivals made profits through their brokerage arms amid the global stock market rally. It even lagged behind NongHyup Financial Group in last year's earnings. NongHyup acquired Woori Investment & Securities in 2014, which was done as part of the government's efforts to privatize Woori. The securities firm changed its name to NH Investment & Securities after the takeover.
"If Woori enhances its return on equity through acquisitions of non-banking operations, such as the brokerage business, it will likely be able to improve its stock price," Kiwoom Securities analyst Seo Young-soo said in a recent report.
Since Woori adopted a financial holding company structure in 2019, Chairman Son Tae-seung has emphasized a push to acquire a securities firm to expand its non-banking portfolio. Yuanta, Kyobo and Samsung securities have been mentioned as Woori's M&A targets over the past two years, despite their continued denials.
"Our group without brokerage and insurance subsidiaries had to face many difficulties in terms of profitability last year," Son said in his New Year address. "A sizable acquisition in a short period of time may not be easy, but I will seek to expand our non-banking portfolio to continue to strengthen our group's growth engine."
After Woori Investment Bank CEO Kim Jong-deuk hinted at the group's acquisition of a securities firm in the near future during an interview with a local newspaper last week, rumors of Woori's acquisition of Yuanta Securities reemerged in the domestic market, although both sides denied such prospects.
In addition, DS Investment & Securities was briefly mentioned as a target, until Woori denied the possibility, citing a news report on Friday that DS Asset had been selected as the preferred bidder to acquire the securities firm.
Some market insiders speculate that the group may seek to transform Woori Investment Bank into a securities firm, instead of pursuing an acquisition, considering that the valuations of local brokerages have skyrocketed with the recent stock market rally.
