Woori bank is rapidly emerging as a major hand in the merger and acquisition (M & A) market as the bank declared its conversion into a holding company. Despite Woori Bank failed to reach a big deal due to the limited capital limit, Woori Bank is expected to take over a large non-bank financial company, such as insurance and securities, when it converts to a holding company structure.

According to the financial sector on May 22, in the case of Woori Bank concludes its transition to holding company at the beginning of next year, the amount of funds it can utilize to acquire subsidiaries will increase to KRW 7 trillion. Woori Bank, as of the end of March, is subject to the Banking Act, which limits the amount of subsidiary investment to 20% of its equity capital (KRW 19.8 trillion). If KRW 3.3 trillion is excluded, the investment capacity was only KRW 700 billion.

However, if Woori Bank is converted into a holding company, it will not be subject to limitations on subsidiary investment. However, it will be subject to indirect regulation of double leverage ratio. The leverage ratio is calculated by dividing the amount invested in subsidiaries by the shareholders` equity of the financial holding company, and the financial authorities should not exceed 130%. If this regulation is applied, the additional funding amount to the holding company will increase to 7.6 trillion won. "The biggest effect of Woori Bank`s financial holding company transformation is diversification and diversification of affiliates," said Kim Do-ha, a researcher at SK Securities. "Even if we exclude inventories, additional investment is possible in the second half of the KRW 4 trillion ranges.

Woori Bank is expected to find a large number of non-bank subsidiaries by utilizing the increased resources available. In particular, Son Tae-seon, who was interested in capital, asset management companies and real estate trusts after his appointment, will speed up the acquisition of non-banking subsidiaries such as promising asset management companies and real estate trusts.

Meanwhile, Woori Bank, which has been taking over Capital by equity method through private equity funds, is expected to make Capital a subsidiary shortly after the conversion to a holding company. Securities and insurance are also interested, but it is the conflicts of interest with large shareholders, such as life insurers and securities companies. An official from the financial sector said, "Sohn Sun-seung, the head of the bank, should have considered his relationship with the oligopolistic shareholder in referring to capital, asset management and real estate trust." In addition, large securities firms and insurers such as Woori Investment & Securities "He said.

In the financial market, on the other hand, analysts say that Woori Bank will continue to pay attention to the securities industry. Although Woori Bank had a leading securities company called Woori Investment & Securities, Woori Bank sold it to the Nonghyup Financial Group in the privatization process. Nonghyup Finance Co., Ltd. has taken the lead in the financial investment industry by acquiring Woori Investment Securities and launching NH Investment & Securities. As a result, Woori Bank is known to have a strong will to acquire large securities firms. Some analysts say Woori Bank will be a strong candidate for acquisitions if large securities firms, such as Samsung Securities, which has been controversial due to recent ghost stock issues, are listed. In fact, Woori Bank has also established a multi-site store in cooperation with Samsung Securities even when other banks are building multiple stores with securities companies in the holding.

By Cho Eun Guk ceg4204@


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