No Let-up on Globalization and Privatization Plans

Woori Financial Holding Chairman Lee upbeat on the financial group's future, despite economic crisis

Chairman Lee Pal-seung of Woori Financial Holding Co. said there will be no let-up in the globalization and privatization plan for his financial group, including Woori Bank, although the financial market is going through a tight situation like any other financial markets in the world.
As a way to achieve the goal, the financial group is going through a campaign to cut costs in every phase of its operations. The entire employees totaling 26,000 working for the group's affiliates have been keen on reducing wastes in the processes of executing their jobs and thus upgrade the effectiveness of their work, the chairman said on the occasion of the initial year anniversary of his taking charge of management of the group a year ago on June 27, 2008 as chairman.
The cost cutting campaign this time, is different from those in the past as the group is seeking to cut the costs on a permanent basis, not just for a while as was the case in the past.
The chairman has not been happy on his job lately as he has so many worries over the group's operations. May be it was just a bad luck. After the two months on the job as chairman, the Lehman Brothers' fiasco broke out in the United States with a huge impact on the global financial market to the extent that the global financial system nearly collapsed..
Lee couldn't do any thing to keep the group's operation on the right track as if nothing has happened when the entire global system is on the brink of destruction.
When he joined the group, he envisaged to expand the group's scale of operation to rank among the 30 largest in the world, but now at stake is its survival. It has become increasingly difficult to renew loan periods of its borrowings from foreign lenders and nonperforming assets began to increase, leading to falls in net profits.
The group's MOU with the Korea Deposit Insurance Co. that it will achieve its operation targets in 2008 was not satisfied, and the group has not been able to keep its operation in the black in the Q1 either.
The chairman's problems are that he cannot blame the global economic set back for its poor performance results as its domestic rivals, including KB Financial Holding Co. and Shinhan Financial Holding Co. did better.
In the meantime, President Lee Chong-whi of Woori Bank said the bank should increase its capital as it is the best way for the bank to cope with various changes in the financial market. He said capital increase through the issuance of subordinated bonds and hybrid bonds have limits and the bank has trouble increasing its capital as the government is its major shareholder.
Lee, during his interview with a local daily on the occasion of his initial year anniversary as the CEO of the bank, he said the bank's profits have no choice but to fall as hybrid and subordinated bonds take up over 7 trillion won of the bank's 12 trillion won capital, showing that the bank is subject to pay 6 percent annual interest charges on those bonds.
Reports said officials of the bank have been busy to find ways to raise the bank's capital by calling on financial authorities to persuade the Korea Deposit Insurance Co., a major shareholder of the bank, to agree to increase the bank's capital. Woori Bank suffered loss in the Q4 of last year, but rebounded in the Q1 of this year. But the financial market is still in the doldrums and impacts from restructuring of major business firms on banks in general are deeply felt.
The Woori Bank CEO said the bank will run profits in the Q2 thanks to the profit from the sale of the stocks to be turned into investments. In the second half, the bank will see the net interest margin hitting the bottom and non-performing loans increase rate slowing down, which will help the bank turn in profits, Lee said.
He will also see that the number of items to be on the performance evaluation list reduced and branches will be allowed to set their own operation targets under the bottom-up management system, instead of the top-down system as a means to set up an autonomous operation system for branches.
Banks who have problems caused by negative net interest margins have been pondering with changing the deposits, he said. But it is up to customers to select the interest rates, not for banks to change them, in short-term at that, he added. nw

Chairman Lee Pal-seung of Woori Financial Holding Co.