À̹ÌÁö È®´ë South Korea¡¯s Woori Financial Group continues to bulk up regardless of the challenging environment under virus risk.
Woori Financial Group bumped up its equity capital by 3.6 trillion won ($2.9 billion) over a year through issuance of securities uncounted as debt, according to the Financial Supervisory Service (FSS). The company has sold hybrid and subordinated bonds to raise funds for M&As to build up its portfolio as a full-fledged holding structure.
Its equity capital totals 25.8 trillion won as of March 31, 2020.
The financial conglomerate is also seeking approval from the FSS on using the internal ratings-based approach for calculating risk-weighted assets. The financial authority already has completed due diligence on the Woori Financial Group. The group plans to file a formal application for the use after a final discussion with the risk management committee and board members this week.
The internal ratings-based approach allows banks to assess risk weights based on the internal rating of borrowers, which helps cut the weight of risk-weighted assets and raise the capital adequacy ratio calculated based on the Bank for International Settlements (BIS) guideline by as much as 2 percentage points. A financial company with a higher BIS has more room to beef up assets through loans and M&As.
Woori is the last among the country¡¯s top four financial groups to adopt the internal ratings-based approach. KB Kookmin, Shinhan, and Hana that were transformed into a financial group holding system prior to Woori are already using the method.
Implementing the internal ratings-based approach is one of Woori Financial Group¡¯s main objectives this year, said an industry source, adding that the financial group would seek the formal approval soon as due diligence was completed without any issues.
À̹ÌÁö È®´ë Woori Financial Group¡¯s BIS capital adequacy ratio is 11.89 percent as of the end of March, higher than the minimum ratio of 11.5 percent recommended by the FSS. Its risk-weighted assets are estimated at 217 trillion won, given that its capital totaled 25.8 trillion won at end-March. This means the group would be able to expand risk-weighted assets by 6 trillion won when the BIS ratio rises by 2 percentage points with the use of the internal ratings-based approach.
The financial group is expected to accelerate its M&A moves with the extra ammunition, especially to add securities firms.
Names of mid-sized securities companies including Kyobo and Yuanta have been floating in the market as Woori Financial Group¡¯s top M&A candidates, said an industry expert.
On top of aggressive M&A, the group also is accelerating digital transformation. Sohn Tae-seung, chairman of Woori Financial Group, unveiled the company¡¯s new vision of ¡®Digital for Better Life¡¯ last Friday. The growth of the contactless business driven by COVID-19 outbreaks has become a ¡°next normal¡± (new standard), Sohn said, adding that ¡°now is the golden time for digital innovation.¡±
By Moon Il-ho and Cho Jeehyun
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