KB Financial Can't Afford To Buy Woori Finance - Chairman

KB Financial Group (105560.SE), one of South Korea's four largest financial holding firms by assets, cannot afford to buy its bigger rival Woori Finance Holdings (053000.SE), KB Financial Chairman Euh Yoon-dae said.

"It will cost us (around) KRW10 trillion ($8.77 billion) to buy Woori. We don't have that much money available," Euh told a group of reporters recently as confirmed by KB Financial.

The South Korean government is preparing to launch its third attempt to privatize Woori Finance, the nation's largest financial holding firm by assets. Seoul has recently reiterated that it is open to merging Woori Finance with another financial company, which may create a megabank.

KB Financial has been named in a recent local media report as the most likely candidate in such a merger.

The government's second attempt to sell Woori fell apart last year amid a lack of interested bidders.

Under Korean law, in the event of an acquisition involving financial holding firms, an acquiring firm has to buy at least 95% of its target. In Woori Finance's case, a 95% stake is valued at slightly less than KRW10 trillion based on its Tuesday closing share price, a price that analysts say is deemed as too expensive for potential bidders among the local financial holding firms.

Market watchers say the context of Euh's comment could be KB Financial's planned bid for ING Groep N.V. (ING)'s life insurance operations in South Korea. Given that the estimated value of ING's Korean insurance unit is around KRW4 trillion, KB Financial wouldn't have the wherewithal to consider an acquisition of Woori.

-By Kanga Kong, Dow Jones Newswires; 822-3700-1900; [e-mail]