Woori Bank to commit 3 trillion won to business succession over five years

Woori Bank plans to deploy roughly 3 trillion won ($2.17 billion) into the business succession sector over the next five years, positioning the field as a core new revenue stream within its portfolio.

Woori Bank President Jeong Jin-wan made the announcement Monday morning at a press briefing on "productive business succession" held at the bank's headquarters.

Bae Yeon-su, executive vice president of Woori Bank's corporate group, said the funds would be channeled into M&A funds and acquisition financing markets over the five-year period, adding that the bank would draw up a more detailed plan going forward.

"Productive business succession" refers to Woori Bank's one-stop support program designed to protect employee job security, strengthen supply chain stability within industries, and preserve the technology of small and medium-sized enterprises. In February, the bank became the first in the Korean banking sector to establish a dedicated Business Succession Support Center staffed by specialists in accounting, taxation and M&A.

Banks across the industry have been eyeing business succession as a next-generation revenue source, rolling out advisory services in quick succession. Amid that trend, Woori Bank said its ambition is to develop succession services from the standpoint of preserving the broader industrial ecosystem.

"Our perspective is not about transferring wealth between family members, but about preserving jobs and keeping a company's core technology from leaking outside — succession in a form that protects the ecosystem," Bae said. He added that the bank would support a range of succession models, including management buyouts and employee buyouts.

A management buyout, or MBO, is a transaction in which a company's executives or senior managers acquire its shares and control. In South Korea, the management of BHC pursued an MBO in 2018. An employee buyout, or EBO, involves a broader group of employees — including executives — collectively acquiring a company's shares and control. A well-known domestic example is the 2017 case of Korea Engineering Consultants Corp.

The bank also plans to invest heavily in raising awareness of business succession programs. A Woori Bank official said many companies are not even aware that MBO and EBO options exist, and that the bank would use MOUs to publicize such support programs and develop measures to assist with the establishment of special purpose companies.

Through the Business Succession Support Center, Woori Bank has set a target of providing succession consulting to 500 companies per year — and more than 2,500 over five years — selected from among its corporate clients with strong employment records and technological capabilities.