Preferred bidders named for Woori Finance units

South Korea named BS Financial Group and JB Financial Group preferred bidders for two regional banks as the government sells units of Woori Finance, the country's largest financial group by assets.

BS Financial was picked for a 57 per cent stake in Kyongnam Bank, while JB Financial was chosen for a holding of the same size in Kwangju Bank, the Financial Services Commission said in a statement. State-run Korea Deposit Insurance is selling the stakes, for which financial terms were not disclosed. The banks are not publicly traded and the stakes are valued at about US$1.3 billion on Woori's books.

The selection comes a week after Woori Finance, a state-owned holding company created in 2001 through the bailout and merger of the nation's weakest banks, chose NH Financial Group as the preferred bidder for its brokerage unit.

After three attempts since 2010 to sell the entire group, the government is now disposing of its assets individually.

"Adding Kyongnam and Kwangju will benefit BS and JB by giving them the scale they need and expanding their client bases," said Heo Pil Seok, chief executive of Midas International Asset Management, before the preferred bidders were named. "The government's privatisation of Woori looks to be going smoothly so far."

Kyongnam Bank's union would go on strike to protest against the selection of BS Financial and take all possible measures to block the sale, the Korea Financial Industry Union said yesterday. The nationwide association had supported a consortium led by businessmen based in the lender's home province of Gyeongnam.