Moody’s Investors Service recently affirmed the ratings of Woori Finance Holdings and its subsidiaries, including Woori Bank, Kyongnam Bank and Kwangju Bank, after the South Korean government announced plans to privatize the company.
Moody’s said it would maintain stable ratings outlooks for Kyongnam Bank and Kwangju Bank because of the lack of details regarding the potential partners and structure involved in the deal. The ratings service will reassess the ratings and outlooks as new details emerge.
The ratings agency did, however, change the outlook of WFH to positive from stable because its ratings are expected to equalize with those of Woori Bank as a result of its incorporation into the bank.
WFH will be merged back into Woori Bank after spin-offs of the regional banks occur and a buyer for the brokerage unit is decided. Moody’s changed the outlook for Woori Bank from negative to stable.
Moody’s voiced concern that Woori’s long-term deposit and debt ratings could come under pressure if the government privatizes WFH before the bank improves its standalone credit profile or if the merger puts pressure on its financials, including capital.
Bidding on the regional banks and brokerage unit will begin on July 15.
The South Korean government has a 59.97 percent stake in WFH through Korea Deposit Insurance Corp. and made earlier attempts to sell its stake but failed because it tried to sell the whole group at one time.