Woori Financial Chairman Lim Jong-ryong Faces Challenges Despite Major Acquisition

Woori Financial Group Chairman Lim Jong-ryong has come under fire as he tries to complete the final piece of an expanded financial portfolio with the acquisition of Tongyang Life and ABL Life Insurance. Despite successfully navigating major M&A hurdles, Lim has foregone a celebration and instead opted for a public apology, signaling his intention not to provoke financial regulators. The acquisition comes at a time when Lim’s position is already under threat from improper lending under his predecessor’s leadership.

Even if regulatory approval is obtained and subsidiaries are successfully integrated, significant challenges remain, including the integration of organizational cultures.

According to industry sources, Woori Financial signed a share purchase agreement (SPA) on August 28 to acquire 100% of ABL Life and 75.34% of Tongyang Life from its parent, China-based Dajia Insurance Group, for a total consideration of KRW 1.5494 trillion. The acquisitions, worth KRW 1.284 trillion for Tongyang Life and KRW 265.4 billion for ABL Life, mark Woori Financial’s major entry into the insurance sector, a long-standing goal since the group spun off Woori Aviva Life in 2014.

Once the acquisitions are completed, Tongyang Life is expected to be delisted and fully integrated as a subsidiary, with further plans to merge it with ABL Life. The combined entity would become the sixth largest player in South Korea’s life insurance market, with total assets of KRW 51 trillion.

Despite the acquisition being a significant milestone, Woori Financial has opted for a more cautious approach rather than celebrating. Chairman Lim Jong-ryong issued another public apology after the announcement, his second since August 12.

“I once again offer my sincere apologies for the distress caused to the public and our customers by the improper loans linked to the family members of my predecessor. Should the investigation yield results, I, together with the bank’s executives, will humbly accept the appropriate measures and procedures,” Lim said.

The move is seen as a response to mounting pressure from the Financial Supervisory Service (FSS) over misconduct under the previous administration. With the final step in the M&A process, regulatory approval, Lim’s cautious stance reflects the high stakes involved.

Under Section 17 of the Financial Holding Companies Act, financial regulators must assess the business plans, financial circumstances and overall management of a financial holding company seeking to establish new subsidiaries. Issues such as financial soundness and management can become points of contention during the assessment, and without approval, Lim’s vision for an expanded financial group could be derailed.

Some observers suggest that Lim’s position could also be in jeopardy. Even if he is not sanctioned, he could still face pressure to step down due to the FSS’s continued surveillance. FSS Governor Lee Bok-hyun has openly criticized Woori Financial’s leadership and said that someone must be held accountable.

The FSS believes that Woori Financial’s management, including Chairman Lim and the bank’s president Cho Sung-kwon, failed to report the illegal loans to authorities. Speculation has arisen that both Lim and Cho may step down voluntarily, particularly in light of previous scandals involving large-scale embezzlement and illegal loans earlier this year.

However, industry experts consider the worst-case scenario unlikely. The decision by the Woori Financial Board to approve the acquisitions suggests confidence not only in Lim’s position, but also in obtaining regulatory approval.

Since the illegal loans originated from Woori Bank, any institutional sanctions would likely only apply to the bank and would not affect the holding company or the integration of its subsidiaries.

Nevertheless, even if the regulatory approval is granted, significant challenges remain, particularly in the area of ​​organizational culture integration. Tongyang Life and ABL Life not only need to merge, but they also need to be aligned with the existing culture of Woori Financial Group.

Woori Financial still struggles with long-standing internal conflicts, dating back to the merger with Hanil Bank and Commercial Bank 20 years ago. Now the company faces a new challenge in cultural integration.

A spokesperson for Woori Financial said: “This SPA marks the first step in the acquisition of our insurance company. With regulatory approval still pending, we remain committed to carefully navigating the review process.”

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