Woori Finance's ratings withdrawn
Singapore: Credit rating agency Fitch has affirmed the LongTerm Foreign Currency Issuer Default Rating (IDR) of Koreabased Woori Finance Holdings (WFH) at 'BBB+' and revised the Outlook to Positive from Stable. The agency has simultaneously withdrawn the ratings on WFH as they are no longer considered by Fitch to be relevant to the agency's coverage. Fitch will no longer provide ratings or analytical coverage of WFH.
The revision of Outlook to Positive from Stable reflects the agency's expectation that WFH's Long-Term Foreign Currency IDR would ultimately be Woori Bank's (A-/Stable), the flagship bank subsidiary of WFH, as the Korean government plans to reorganise and sell the bank holding company in the short- to medium-term. The agency believes that the key objective of the regulatory framework is to protect depositors at the subsidiary banks and ensure their viability.As part of the government's plan to sell its controlling stake (57%) in WFH, the bank holding company will spin-off its regional bank subsidiaries, Kyongnam Bank and Kwangju Bank, and sell non-bank operations including Woori Investment & Securities. After the spin-offs and sales, the only meaningful businesses that WFH will have are Woori Bank and Woori Card, which will be merged with WFH to become a new Woori Bank. WFH's IDRs are backed by the IDRs of its flagship bank subsidiary, Woori Bank. The latter reflect Fitch's belief of an extremely high propensity of extraordinary support from the South Korean government (AA-/Stable), if needed. WFH's LongTerm IDR, Support Rating (SR) and Support Rating Floor (SRF) are one notch lower than Woori Bank's. This is because WFH will only benefit from the government ownership/control and support if such support is directed at its subsidiary banks.