|2011-12-23 - 02:59:00 - DJ UPDATE: Woori Finance Looking Into Various Ways To Raise Capital|
DJ UPDATE: Woori Finance Looking Into Various Ways To Raise Capital
--Woori Finance mulls various ways to raise capital to prop up capital
--Woori informally expressed hope for capital raising to government body mandated to privatize it
--Woori's potential capital-raising is linked to government's years-long privatization plan
(Adds the effect and outlook for fund-raising in the second and fifth paragraphs, background on Woori's expression of interest in capital raising in the third, required capital amount to raise BIS ratio by 1% point in the sixth and background on Woori's creation and privatization plan in the ninth-11th paragraphs.)
By Kanga Kong Of DOW JONES NEWSWIRES
SEOUL (Dow Jones)--Woori Finance Holdings (053000.SE), the subject of two failed privatization attempts by the South Korean government, is looking into various ways of raising funds, including a rights issue, to prop up its capital.
A successful fund raising would bring the capital adequacy ratio of the nation's largest financial holding firm by assets to a level closer to its domestic rivals. However, getting approval for such a plan from the government--which is Woori's biggest shareholder--may prove a major hurdle ahead of further attempts to privatize the company and elections scheduled for next year.
Company and government officials said Friday that Woori expressed a desire to explore a fund raising plan a few months ago when its brokerage unit, Woori Investment & Securities Co. (005940.SE), was reviewing a capital increase. At the time, it didn't make any official request to the government body mandated to privatize Woori.
"We've considered how we can raise capital (internally), but are not specifically targeting a rights offering," a Woori official told Dow Jones Newswires in a response to a local newspaper report that said the group plans to raise up to KRW1.5 trillion ($1.3 billion) by March by issuing new shares or debt. The report quoted an unnamed Woori official as saying that Woori will use the proceeds to strengthen its own capital ratio and also inject about KRW500 billion in capital into its regional banking subsidiaries, Kwangju Bank and Kyongnam Bank. Woori Finance denied in a regulatory filing that it currently has a rights offering plan.
Raising funds would help shore up Woori's BIS ratio--an internationally used measure to estimate the financial strength of banks--which lags behind its domestic rivals. Woori Finance's ratio was 12.08% at the end of September, according to data from the financial watchdog, lower than Shinhan Financial Group's (055550.SE) 13.37%, 13.05% for Hana Financial Group (086790.SE) and 13.67% for KB Financial Group (105560.SE).
The Woori official said that it needs around KRW2 trillion to raise the BIS ratio by one percentage point.
The official said that raising capital "is merely Woori's hope at this stage" and it may take at least a few more months for a definite proposal to emerge.
That is because its largest shareholder, the government, may object to the plan on concerns about dilution of its 57% holding ahead of moves to privatize the company.
The government owns Woori Finance through state-run Korea Deposit Insurance Corp. Woori was created in 2001 as a holding company for several financial companies that required public bailout funds in the wake of the 1997-1998 Asian financial crisis.
In August, the Public Fund Oversight Committee, which is overseeing the Woori sale, halted the process for a second time due to insufficient interest from bidders, which was a setback for President Lee Myung-bak's pledge to reduce the public sector's influence in the economy.
Many analysts believe that the new sale plan won't emerge until 2013 due to parliamentary and presidential elections set for next year.
-By Kanga Kong, Dow Jones Newswires; 822-3700-1900; firstname.lastname@example.org
(END) Dow Jones Newswires
December 22, 2011 21:59 ET (02:59 GMT)
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