SEOUL, June 23 (Reuters): South Korea will split the sale of its 57 per cent stake in Woori Bank, the country's second-largest bank, into two tranches with the largest portion - an offering of 30 per cent - seen worth roughly $3 billion.
The 30 per cent holding would convey management control but the outlook for a robust bidding process is weak, with only Kyobo Life Insurance, the country's third-largest insurer, having publicly flagged interest in a controlling stake so far.
Woori Bank is the crown jewel in Woori Finance Holdings , accounting for 70 per cent of its assets. Its sale is the last and most important leg of the government's attempt to recoup as much as possible of more than $12 billion used to bail out the financial group over a decade ago.
But selling off its assets has been a complicated and drawn out affair as South Korea requires at least two bidders for a government sale by law, and as foreign investors are reluctant to enter a market seen as having poor returns and difficult to exit.
"Because the financial and banking sectors are in a difficult situation, it's not a situation where we can generally expect massive demand," said Park Sang-yong, chairman of the Public Funds Oversight Committee in charge of recouping bailout funds.
"It's hard to tell at the moment...another bidder could emerge in the next 5-6 months," Park said.
Woori Bank, which has become a big corporate lender under the state ownership, saw operating profit slide by almost a third to 464 billion won ($455 million) in 2013, hit hard by failures of units owned by cash-strapped local conglomerates.
South Korea's National Pension Service, the world's fourth-largest pension fund, and other investors own the remaining 43 per cent of Woori Bank.
The government has so far recouped 5.8 trillion won from Woori asset sales as of May though that figure does not include gains from two units that have been sold. Proceeds of some asset sales are expected to go towards paying down Woori Finance's debt.
There was limited foreign investor interest in some earlier asset sales, but all chosen buyers have been local.
Costs have risen and competition has intensified in South Korea's banking market, prompting Citigroup Inc, Standard Chartered Bank and HSBC to all pull back.
