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Eyes on whether Fubon Life will be able to buy shares in Woori Financial Major shareholders of Fubon Life's parent are major shareholders of Taiwanese mobile operator

Translated by Kim So-in 공개 2021-10-21 08:07:03

이 기사는 2021년 10월 21일 08:03 더벨 유료페이지에 표출된 기사입니다.

Market insiders are paying attention to whether Fubon Life Insurance, a unit of Taiwan’s Fubon Financial Holding, will be able to acquire an additional stake in South Korea's Woori Financial Group as the insurer may be regarded as industrial capital.

The Korea Deposit Insurance Corporation (KDIC) selected Fubon Life as one of its shortlisted bidders to buy a minority stake in Woori Financial and allowed it to conduct due diligence, according to industry sources on Tuesday.

Fubon Life has a deep understanding of Woori Financial as it acquired a 4% stake in the financial services firm in 2019, but it is likely to perform due diligence anyways. Fubon Life reportedly offered to acquire an additional 4% stake in Woori Financial in its letter of intent submitted earlier this month.

However, with Fubon Life already holding 4% of Woori Financial, this could complicate the insurer's attempt to purchase an extra stake in the company.

Under the principle of separation of financial and industrial capital, industrial capital needs to get an approval from the Financial Services Commission (FSC), the country's financial watchdog, to acquire more than a 4% stake in a financial holding company.

Even foreign industrial capital needs the FSC’s authentic interpretation to buy a stake in a domestic financial institution which exceeds a permitted limit. Some analysts said that it may be a burden for the Korean authorities to sell a large stake in Woori Financial to Taiwan-based Fubon Life.

Fubon Life may seem as financial capital as its parent Fubon Financial Holding provides banking, insurance, and brokerage services in Taiwan. Fubon Life owns a 77% stake in Fubon Hyundai Life Insurance.

However, Fubon Financial Holding’s major shareholders, Richard M. Tsai and Daniel M. Tsai, are also major shareholders of mobile phone operator Taiwan Mobile and home shopping and e-commerce business momo.com.

If the Korean financial authorities view Fubon Life as industrial capital, the insurer must obtain approval from the FSC on the condition that it will not exercise its voting rights on Woori Financial shares. It will be a complicated process to purchase a stake as the life insurer will have to meet various regulatory conditions, including financial soundness, to obtain approval from the financial authorities.

This was also the reason that Fubon Life had to acquire only 4% of Woori Financial in 2019 out of 5.83% put up for sale by Woori Bank at the time. The Korean bank sold the remaining 1.83% via a block deal.

It remains to be seen whether the financial authorities will allow a foreign company to own a large chunk of shares in a domestic financial holding firm. If Fubon Life is allowed to hold an 8% stake in Woori Financial, it will become the firm's second largest shareholder after the National Pension Service. (Reporting by Hyun-jung Kim)
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