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| Woori Financial Group headquarters in Seoul / Yonhap |
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| Woori Financial Group Chairman Son Tae-seung |
Woori Financial Group will be able to push for aggressive M&As in 2021, after Chairman Son Tae-seung was cleared of allegations that he received a bribe in the case of the mis-selling of funds by Lime Asset Management.
Last week, the prosecution concluded that Lime Asset Management attempted to lobby Woori’s top-ranking officials and resume sales of the problematic hedge funds last year, but Woori declined to accept.
With Son being cleared from the controversy, he will likely speed up the group’s expansion into untapped territories particularly non-banking sectors.
Almost all financial holding firms here are going all-out to find their next cash cow by reducing their heavy reliance on revenue from interest rates in their loan business.
With the global economy showing no clear signs of bouncing back amid prolonged low interest rates and low growth, the Woori chief has in recent years underlined the importance of expansion into non-banking areas ― such as securities and insurance.
The acquisition of non-banking financial players is a must for Woori to survive in the fierce competition with rivals such as Shinhan, KB, Hana and NongHyup.
The latest in a series of Woori’s acquisitions of a non-banking financial player came in late October when it took over a 74-percent stake in Aju Capital for 570 billion won.
Despite the acquisition of the mid-tier capital leasing firm, analysts say there is much to be desired of Woori, as it does not operate any securities and insurance affiliates ― which are often considered major cash cow businesses in the non-banking sector.
Among the so-called top five financial holding firms, Woori is the only one that does not operate a securities affiliate.
Starting last year, Son reiterated his determination to acquire a brokerage house ― which has yet to be realized. At that time, he left open the possibility of making an equity investment in a securities firm if it failed to find a proper target for acquisition.
However, it remains to be seen whether the top-tier financial holding firm will be able to achieve its long-time goal next year at a time when few brokerage firms here are expected to be put up for sale amid the stock investment boom.
For this reason, the company may have to turn its eyes to purchasing other non-banking players ― such as venture capital firms ― as these do not require huge capital to purchase, but their business comes with huge growth potential.
Shinhan Financial Group has recently finalized its acquisition of Neoplux, a local venture capital company, formerly owned by cash-strapped Doosan.
“Even if purchasing a mid-tier securities company is the best-case scenario for Woori’s M&A drive next year, this will not be that easy for the time being amid the stock market rally, which will likely continue next year,” an industry source said. “Competition in the non-banking sectors will get tougher and tougher next year amid prolonged low interest rates and the global economic doldrums.”