NH takes over Woori Securities

A mega-size brokerage house will come into existence following the merger of the brokerage units of Woori Financial and NH NongHyup Financial groups.

Both the size of assets and the number of staff will be the country’s largest.

The boards of directors of the two groups approved NH NongHyup Financial’s takeover of Woori Investment & Securities and two other non-banking arms, Friday, about four months after NH was picked as the preferred bidder for the deal.

Their combined equity capital will be 4.3 trillion won, far exceeding that of the current No. 1, Daewoo Securities’ 3.9 trillion won. The number of staff will be 3,929, also surpassing Daewoo’s 3,090, and it will also have be 133 branches, more than Tongyang Securities’ 116 and Hyundai Securities’ 109.

However, the chance of restructuring during the merger is high, as many of the two companies’ functions overlap and most brokerage houses are downsizing their organizations amid falling profits.

Rumors are that about 1,000 Woori workers and 150 NH workers will have to leave, although the companies deny the rumor. Woori’s labor union is demanding NongHyup their employment and managerial independence and delay the merger for five years.

Woori’s 10 overseas branches may remain intact as NH does not have any.

NongHyup expects synergy for the brokerage sector through the takeover, as well as a balanced business portfolio.

“The group used to rely on the banking unit heavily, but we expect to have balance among the banking, brokerage and insurance arms,” a group official said.

At the board meeting, Woori Financial’s directors approved selling the non-banking units for 1.05 trillion won ― about 10 percent lower than the price which NH had initially suggested.

NongHyup’s board also confirmed the deal and the two sides signed the stock purchase agreement.

The two groups reached a compromise over a suit filed against Woori Investment for a failed project financing investment in France ― if the brokerage house loses the suit and has to pay 50 billion won in compensation, Woori Financial will return the money to NH.

NH will submit the deal to the Financial Services Commission for approval, which will take about a month.

The group also plans to present a blueprint for the takeover around May, including when to merge the brokerage houses, how to manage the new entity and how to maximize the synergy of the takeover. By Kim Rahn, The Korea Times