South Korean government’s plan to start offloading remaining holdings in Woori Financial Group early this year has hit a snag, with the company’s stock price hovering below a pre-determined level amid ongoing controversy over miss-selling of high-risk derivative-linked funds and broadly tepid investment appetite amid virus scare.

Shares of Woori Financial Group Inc., holding entity of the country’s leading financial conglomerate, closed 9,950 won ($8.27) apiece on Thursday. The stock lost even more on Friday, trading at 9,850 won as of 11:08 a.m.

The government has set a target to sell shares at 16,181 won, the average price of Woori Bank from April 2017 and September 2019 before it was converted into Woori Financial Group through a transition into holding structure.

State-run Korea Deposit Insurance Corp. owns a 17.25 percent stake in Woori Financial Group and has a plan to cash out by 2022 by selling some of remaining stake in the financial holding during the first half of this year, according to the Financial Services Commission (FSC)’s report to the National Assembly last year on managing public funds.

Woori Bank had been a wholly-owned government entity through a merger of major lenders in the wake of the 1997 Asian financial crisis. The government has been divesting its stakes in the financial group in small batches in the past several years with an aim to fully privatize the lender by 2022.

The depreciation will likely defer the sale plan as the FSC’s public fund oversight committee has pledged to maximize returns on public funds’ investment. Market analysts estimate the appropriate sale price would be around 14,000 won apiece.

It is the first time for the stock price to dip below 10,000 won since 2014 when the company, then-Woori Bank, went public on the Kospi bourse. The stock price has been on a downward spiral over the last few weeks after its flagship unit Woori Bank came under fire for neglecting to fully explain buyers the risks of investing in derivative-linked fund products tied to German government bonds, which have incurred massive losses to itself and retail investors.

FSC chairman Eun Sung-soo during a meeting with National Assembly’s state affairs committee on Thursday reaffirmed that the government is committed to its original plan to sell off Woori Financial Group stakes as planned, although the current market conditions make the sale process difficult.

Market experts anticipate the FSC to release its updated plan on the Woori Financial Group privatization process after the public fund oversight committee’s meeting next Monday.

By Kim Gang-rae and Cho Jeehyun

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