Woori Fi­nance's rat­ings with­drawn

The Pak Banker - - 6BUSINESS -

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.

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