November 25, 2024

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People walk into a building with a sign showing the name of Woori Financial Group at the conglomerate's building in Seoul in 2023. (Newsis)

Woori Financial Group is actively considering the acquisition of local online brokerage firm Korea Foss Securities, in a move to add a missing puzzle piece -- a securities arm -- as a leading banking giant.

"We are reviewing all potential companies (for acquisition) to make inroads into the (securities) industry, with the brokerage mentioned among them," the group's Chief Financial Operator Lee Sung-wook said Tuesday during the company's conference call.

Speculation about the potential acquisition emerged last week when Korea Foss Securities, an online-only brokerage company, was put up for sale.

While industry sources suggest that discussions about the deal may have taken place during Woori's board meeting on Tuesday, the company declined to confirm the matter.

This move represents Woori's latest endeavor to acquire a securities firm, as it is the only one among the country's top five financial holding firms without a brokerage arm. In 2014, when current Woori Chairman Yim Jong-ryong had been the CEO of NH Financial Group, NH acquired the former Woori Investment & Securities -- now NH Investment & Securities.

Since assuming office in March 2023, Yim has consistently advocated for the acquisition of a brokerage firm, emphasizing the need for Woori to diversify its revenue streams beyond the banking sector. Approximately 90 percent of Woori's net profit is derived from its banking operations.

To prepare for its entry into the securities industry, Woori has been increasing its ownership of existing subsidiaries, such as Woori Investment Bank and Woori Venture Partners last year. Additionally, it recently agreed to acquire the remaining 27 percent stake in Woori Asset Management from Yuanta Securities.

Initially targeting mid-tier securities firms -- such as SK Securities, eBest Investment & Securities or Yuanta Securities -- Woori may now be considering Korea Foss Securities as a viable option, especially given the latter's focus on digital innovation.

Established as Fund Online Korea in 2013 and rebranded as Korea Foss Securities in 2019, the company does not maintain physical branches and is primarily owned by Korea Securities Finance Corp., holding a 51.68 percent stake.

Exclusively operating online, the firm offers fund products through its "Fund Supermarket" platform. As of the third quarter of 2023, its equity capital stood at around 70 billion won ($52.7 million).

If the acquisition proceeds, Woori is likely to merge Korea Foss Securities with Woori Investment Bank, leveraging its existing infrastructure to enter the securities business without acquiring a new license.

Furthermore, Woori Financial Group recently increased the paid-in capital of Woori Investment Bank by 500 billion won, bringing its capital close to that of a local mid-tier securities firm, signaling its serious intent to make inroads into the securities sector.

By Choi Ji-won (jwc@heraldcorp.com)