The Financial Supervisory Service confirmed that it has delivered a 3rd-grade assessment result to Woori Financial Group. Woori Financial is pursuing the acquisition of insurance companies including TONGYANG Life Insurance and ABL Life Insurance; however, receiving a 3rd-grade rating in the management status evaluation may hinder the acquisition.
On the 19th, comprehensive coverage by ChosunBiz revealed that Woori Financial received information that it has been granted a 3rd-grade rating in the recent evaluation from the Financial Supervisory Service. The management status evaluation rating is ultimately determined by comprehensively assessing capital adequacy, asset soundness, management capability, revenue, and liquidity; receiving a rating of 3rd grade or lower may lead to complications in subsidiary acquisitions. Financial groups must generally obtain a grade of 2 or higher in the management status evaluation to gain approval for acquiring subsidiaries. Woori Financial's previous rating was 2nd grade.
The Financial Supervisory Service revealed that it uncovered 101 cases of improper loans at Woori Bank through a major inspection last year. The total amount of improper loans is 233.4 billion won, of which 73 billion won is related to improper loans involving relatives of former Woori Financial Chairman Son Tae-seung. In this management status evaluation, the Financial Supervisory Service separated internal controls into a separate evaluation section and tripled the evaluation weight from the previous 5% to 15%.
Previously, Woori Financial submitted an acquisition approval application for Tongyang and ABL Life Insurance to the financial authorities on the 15th of last month. The review period is 60 days, so the authorities must reach a conclusion next month. The approval for the insurance company acquisition is ultimately granted by the Financial Services Commission. Even if the Financial Supervisory Service gives a 3rd-grade evaluation, the Financial Services Commission may approve Woori Financial's acquisition of the insurance company with conditions such as capital increase and disposal of non-performing assets.
At a meeting with bank presidents held at the Bankers Association in Jung-gu, Seoul, FSS Chairman Lee Bok-hyun met with reporters and noted, "The derivation of the management status evaluation and the subsequent issues related to subsidiary incorporation will be conducted rigorously in accordance with principles."
After obtaining final internal approval, the Financial Supervisory Service plans to deliver the management status evaluation grade to the Financial Services Commission within this month. In this regard, an FSS official noted, "Woori Financial's management status evaluation grade has not yet been finalized."