Woori Finance to acquire Samhwa Mutual Savings Bank

KDIC chooses Woori Finance to take over the lender which was suspended because of its troubled capital condition.

Woori Finance Holdings Co. was chosen by state-run Korea Deposit Insurance Corporation as the preferred bidder for Samhwa Mutual Savings Bank as officials sought to calm fears among depositors about the condition of the savings bank sector, which has been burdened with construction loan defaults.

Depositors’ reactions so far to this week’s news of the six-month suspension of operations of Busan Savings Bank and its affiliate Daejeon Mutual Savings Bank have been much calmer than when Samhwa’s suspension was announced last month.

Several commercial banks said last month that they were willing to acquire Samhwa as part of government-led efforts to rescue the savings bank sector.

Woori Finance, Korea’s second-largest financial group by assets, beat out rival bidders Shinhan Financial Group and Hana Financial Group to purchase Samhwa’s assets and assume the ailing bank’s liabilities so that it can resume operation next month.

Samhwa’s suspension was ordered by the Financial Services Commission because of an erosion in its capital structure.

Analysts are still cautious about whether three other affiliates of Busan Savings Bank and five other savings banks placed on a watch list will be able to avoid suspensions of operation because of their deteriorating financial conditions.

View the full story in JoongAng Daily.