President Lee Kwang-goo of Woori Bank. (Photo: Woori Bank)

South Korea’s government has sold a $2.1 billion stake in Woori Bank to multiple investors in its latest bid to privatize the lender and recoup taxpayer money it pumped in to bail out the lender some two decades ago, according to the country’s top financial regulator.

The Financial Services Commission said on Nov. 13 that the sale of the 29.7 percent stake in tranches to seven successful bidders, including Tong Yang Life Insurance owned by China’s Anbang Insurance Group, Eugene Asset Management, Hanwha Life Insurance, Kiwoom Securities, IMM Private Equity, Mirae Asset Global Investments and Korea Investment & Securities. The stake was sold in tranches of 3.7 -6 percent each to them, the FSC said.

KTB Asset Management failed to secure a share with its bidding ruled unqualified.

The Korea Deposit Insurance can collect another 2.4 trillion won ($2.1 billion) from the latest stake sale, raising the total of recouped bailout money to 10.6 trillion won, 83.4 percent of the public funds injected into Woori.

The FSC said the government would continue efforts to sell its remaining shares in Woori and keep its promise to return the bank to private hands as soon as possible.

The Seoul government spent 12.8 trillion won of taxpayers’ money to bail out troubled local financial firms in the wake of the 1997-1998 Asian Financial Crisis. Woori was established in 2001 as their holding company. The Korea Deposit Insurance Corp. once owned 100% of Woori but gradually cut down its holdings in favor of privatization.

After a list of eight bidders was confirmed Nov. 10, the Financial Services Commission and the state-run Korea Deposit Insurance Corporation on Nov. 13 picked the seven firms. Seoul-based IMM Private Equity is acquiring the largest stake at 6 percent, while Mirae is acquiring the smallest portion at 3.7 percent. The remaining five were assigned 4 percent each. The acquisition process will be finalized by mid-December.

Korea Deposit Insurance Corp. is set to recoup another 2.4 trillion won from the stake sale, raising the sum of recovered bailout money to 10.6 trillion won, or 83.4 percent of the public funds injected into Woori. The success of the latest auction follows four foundered attempts to sell the government’s shares to a single bidder. After the last effort in June 2014, the government changed its strategy, opting to split the sale of the stake into two tranches: a 30 percent controlling stake for a single buyer who is interested in actually managing the bank and the remaining 27 percent stake for multiple investors seeking profits.

The seven financial companies are set to become oligopolistic shareholders, or shareholders whose aggregate stocks or investments exceed 51 percent of total shares. Except for Eugene and Mirae Asset, which previously said the acquisition was for investment’s sake, the remaining five new shareholders will each be entitled to name one external member of the board of directors of Woori Bank and the directors will appoint the head of the bank.

Such a management style, which gives greater power to the external board of directors, is nearly unprecedented worldwide and it remains to be seen whether the experiment will be successful.

“We expect the management led by oligopolistic shareholders to become a brand-new model that pursues a ‘reasonable management system’ with a shared goal of resuscitating corporate value,” said FSC in a statement. A long, hard road lies ahead for the bank, given that the government still needs to sell the remaining 21.4 percent stake to one out of the seven, who will eventually become the “owner” next year at the earliest.