To Split-sell Woori Financial Group – What is Split-sale?


In 2001, when the first International Accord of Basel mandated Korean banks to maintain eight percent capital adequacy ratio, five Korean banks of Hanvit, Peace, Kwangju, Kyongnam and Hanaro Investment were pushed over to the verge of collapse. At the end, these five banks were taken over and recapitalized by the government and reborn in a new name, Woori Financial Group.
The last decade has been an extraordinary period of the growth for the Woori Financial. Asset base grew by large amount, and the capital adequacy greatly improved. However, a problem remains unsolved- a number of sales attempts of the group had been frustrated amid a lack of interest.

woori split

As Shin Je-yoon was inaugurated as a new chair of the Financial Services Commission (FSC), the FSC is now very keen to plan for a sale of its long time pending assets. Chairman Shin already mentioned many times that the split-sale will be highly considered to facilitate the privatization of the Woori. Then, a question is instantly raised on this finance vocabulary, “split-sale”. So, what is split-sale?
Split-sale is one of ways of selling assets, also known as divestiture. Split-sale or divestiture refers to a direct sale of a portion of a firm to an outside buyer. It also can take a form of liquidating or spinning off. The selling firm gives up control of the portion of the firm to the buyer in exchange of cash. Split-sale is usually employed to dispose firm’s existing operations and to obtain funds.
Equity carve-out is another way of selling assets. In this method, a new, independent company is created in form of subsidiary. Then shares of the subsidiary are issued in a public offering of stock, and the subsidiary becomes a new legal entity whose management team and operations are separate from the parent company.
Spin-offs are also a very similar concept, but different t that shares are not issued to the public. Instead the ownership is distributed proportionally to the parent company’s shareholders. In other words, shareholders will maintain the same ownership, but the management team and operations become completely distinct and separate.
Under Split-off, shareholders receive new shares of a division of the parent company, whose management team and operations are also independent, in exchange for a portion of parent company’s stocks.
Divestiture, Equity carve-out, spin-offs and split-offs are all the ways a firm can dispose assets and reduces its size. It is significant that it changes the capital structure of the firm and separates a portion of its operations from the parent company. If properly employed, it will increase the firm’s value and facilitate the sales of assets. The FSC’s announcement to split-sell the Woori is expected to bring more interests from potential buyers. Hopefully, Woori’s journey to find a new buyer will be over soon.

Hyungwoo Kim (


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