(Repeat for Additional Subscribers)
June 7 (The following statement was released by the rating agency)
Fitch Ratings has affirmed Korea-based Woori Finance Holdings' (WFH) Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BBB+'. The Outlook is Stable. Fitch has also
affirmed WFH's Viability Rating (VR) at 'bbb-'. A full rating breakdown is provided below.
KEY RATING DRIVERS AND SENSTIVITIES - IRDs, Support Rating and Support Rating
Floor WFH's IDRs are backed by its flagship bank subsidiary Woori Bank's (A-/Stable)
IDRs. The latter reflect Fitch's belief of an extremely high propensity of the
South Korean government (AA-/Stable) to support Woori Bank.
The government owns a 57% stake in WFH through Korea Deposit Insurance
Corporation (KDIC). The holding company wholly owns Woori Bank and two regional
banks. It also has non-bank financial subsidiaries. It does not have any direct
WFH's Long-Term IDR, Support Rating, Support Rating Floor are one notch lower
than Woori Bank's. This is because WFH will only benefit from the government
ownership/control and support if such support is directed at its subsidiary
banks. The agency believes that the key objective of the regulatory framework is
to protect depositors at, and ensure the viability of, subsidiary banks.
A substantial reduction of the government's stake may trigger a negative rating
action on WFH's state support-driven ratings. The government has attempted to
sell the controlling stake in the holding company for a decade but has failed to
A change in the ability of the Korean authorities to provide support may result
in a change in these ratings. Global regulatory initiatives aimed at reducing
implicit government support available to banks may cause downward pressure on
KEY RATING DRIVERS AND SENSTIVITIES - VR
WFH's VR is also one notch lower than Woori Bank's to reflect the holding
company's high double leverage, and the weaker credit profile of other
subsidiaries, including the regional banks and brokerage operation relative to
Its common-equity double leverage ratio has been high at 128% level for years.
Fitch does not expect the leverage to improve significantly. The holding company
cannot offer new rights issue because KDIC cannot inject new capital into WFH.
KDIC can inject capital only to a failed bank as per its governing laws. As
such, WFH has relied on debt funding to support its subsidiaries, to expand and
to meet its own cash flows, therefore weakening its leverage.
A change to the flagship bank subsidiary's VR or a significant change in the
double leverage would directly affect the holding company's VR.
WFH's ratings are:
Long-Term Foreign-Currency IDR affirmed at 'BBB+'; Stable Outlook
Short-Term Foreign-Currency IDR affirmed at 'F2'
Viability Rating affirmed at 'bbb-'
Support Rating affirmed at '2'
Support Rating Floor affirmed at 'BBB+'