South Korea’s third-largest commercial lender Woori Bank will reclaim its financial holding structure five years after losing the status from privatization, gaining a fairer ground in competition with other bank majors that all operate under the all-comprehensive structure.

The Financial Services Commission in a meeting on Wednesday gave the final nod to the bank’s transformation into a financial holding company. Woori Bank will confirm the plan in a meeting with shareholders on Dec. 28 and start anew as a holding company from Jan. 11.

Sohn Tae-seung, chief executive of Woori Bank, in a board meeting on Thursday was nominated to co-head the group and bank.

Woori Bank was established as Korea’s first financial holding entity in 2001 but it yielded the status in 2014 and broke up its non-banking units to facilitate the government’s privatization scheme. In 2016, the government sold off the bank’s shares to multiple owners in the private sector but retained an 18.5 percent stake. The government plans to sell its remaining holdings as soon as the bank finalizes its conversion early next year.

Woori Bank’s holding company is to be set up through a transfer of shares and will be composed of six subsidiaries - Woori Bank, Woori FIS, Woori Private Equity Asset Management, Woori Credit, Woori Finance Research Institute and Woori Fund Services. It will also have 17 other units, including Woori Card, Woori Investment Bank, under its wing.

The new holding entity is expected to bolster non-banking sectors, like insurance and securities, through active M&As. Woori had shed its non-banking units during privatization to rivals including NH Financial Group and DGB Financial Group.

With the change in status from bank to holding company, Woori’s investment capital would see a huge jump from 1 trillion won ($893.4 million) to 9 trillion won. Under Korean law, a bank can only invest up to 20 percent of its equity capital. For a financial holding company, this threshold is 130 percent.

Currently, there are four financial holding companies in Korea - KB, Shinhan, Hana and NH Nonghyup.

On Thursday, shares of Woori Bank closed 1.27 percent higher at 15,950 won.

By Lee Seung-hoon and Kim Hyo-jin

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