Financial Services Commission Chairman Kim Byoung-hwan speaks at a press briefing held at Government Complex Seoul, Wednesday. (Yonhap)
South Korea’s Financial Services Commission (FSC) is undertaking a comprehensive review of Woori Financial, a move prompted by the financial firm’s attempts to acquire new insurers, as announced by the FSC chief on Wednesday.
The FSC is currently evaluating Woori Financial’s proposals to acquire Tongyang Life Insurance and ABL Life Insurance, potential additions to its portfolio. “It is hard to discuss a detailed timeline, as a fair and thorough screening is more important than the schedule. Instead, the screening will be very intensive,” FSC Chairman Kim Byoung-hwan stated at a press briefing held at Government Complex Seoul on Wednesday. “Woori Financial is currently at the top of the deliberation agenda for the FSC. We will put in all efforts to not drag (the screening) on,” Kim added.
Woori Financial’s acquisition aspirations face potential obstacles. Earlier this month, the Financial Supervisory Service (FSS) downgraded the financial service provider’s management evaluation to Grade 3, a consequence of a loan scandal exceeding 230 billion won ($157 million). Under current regulations, a Grade 3 rating generally disqualifies a firm from acquiring new affiliates. However, the FSC retains the discretion to approve such acquisitions, contingent on Woori Financial improving its financial standing, which could involve settling non-performing assets or increasing equity capital. Woori Financial has already submitted a plan to bolster internal controls to the FSS.
“We have to analyze why Woori Financial’s rating was brought down to Grade 3 and whether the firm has the potential to meet the requirements again,” Kim explained.
Simultaneously, Woori Financial Group Chairman Yim Jong-yong issued a public apology for the internal control issues during a shareholders’ meeting held on the same day. “Along with thorough self-reflection, the firm is determined for a complete overhaul to become a trustworthy Woori Financial, reminded that trust is the essence of finance,” Yim stated at the meeting held at the group’s headquarters in central Seoul. “We will lead a complete innovation of the overall system with a strong willingness to reset the systemization of internal control. Fundamentally, we will push to boost the ethics of individual employees and establish an ethical corporate culture.”
