15/04/2013 12:10:00

UPDATE: Woori Finance CEO Resigns After Privatization Failures

--Woori Finance CEO resigns after "regretful" privatization failures

--Resignation has been widely expected since election of new president

--Government is likely to speed up Woori privatization

(Revises throughout, adds background on Woori Finance's past sale attempts throughout.)

By Kanga Kong

SEOUL--The head of South Korea's state-owned Woori Finance Holdings Co. (053000.SE) resigned Sunday, describing as "regretful" the failure to privatize the banking giant three times in as many years, as the government plans to try a fourth time to sell its 57% stake in the bank, which is worth around $4.8 billion.

The Financial Services Commission is now expected to push for a swift privatization after saying earlier this month that it hoped to reveal a new privatization plan by the end of the first half of the year, analysts said.

Lee Pal-seung, the chairman and chief executive of Woori Finance, said in a statement Sunday that he would step down once his replacement was appointed, a process the company said is likely to take around two months. "There were three attempts until last year to privatize Woori Finance, but all failed, which I find regretful," he said.

Mr. Lee was among a number of leaders at key state-owned financial firms and government agencies that were widely expected to step down after President Park Geun-hye took office in late February. In South Korea, big financial corporations without a dominant stakeholder--as is the case with the country's top banks--are considered public trusts of a sort, and the tenures of their senior executives often run concurrently with those of their political allies.

Mr. Lee is considered a close ally to outgoing president Lee Myung-bak, who came to office pledging to reduce government stakes in major companies.

The heads of KDB Financial Group and the Financial Supervisory Service also both resigned recently.

Woori Finance was established in 2001 as a holding company after the government bailed out several financial companies in the wake of the 1997-1998 Asian financial crisis. The government, which holds its stake through state-run Korea Deposit Insurance Corp., reduced its ownership to 57% from 100% through a stock market listing and four block trades.

The government has sought to sell other state assets, including shares in the nation's sole aircraft manufacturer, Korea Aerospace Industries Ltd. (047810.SE), worth around $940 million.

Still, opposition from some lawmakers could stall privatizations. The government said last month it would scrap a planned $1.8 billion initial public offering for Korea Development Bank and would continue to hold at least a 50% stake in Industrial Bank of Korea.

The government has been trying to sell its remaining stake in Woori Finance since 2010. All three attempts failed due to a lack of interest. The 57% stake is valued around 5.4 trillion won ($4.8 billion), based on Monday's closing price of Woori shares.

In the most recent attempt, in July last year, KB Financial Group Inc. (105560.SE), seen as the most likely to acquire Woori, decided against a bid, as did Kyobo Life Insurance Co., the nation's second-largest life insurer.

Write to Kanga Kong at kanga.kong@wsj.com

Subscribe to WSJ: https://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

April 15, 2013 07:10 ET (11:10 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.

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