Woori Bank, a leading South Korean bank, is seeking to spin off its card unit to allow more flexibility and better structure as the bank looks to further diversify its revenues.
Woori Finance Holdings, the nation’s largest financial holding firm by assets, said Monday that its card issuer, currently in the hands of Woori Bank, will stand alone from Dec. 31 as a new affiliate with capital of KRW846.3 billion ($760 million)–or 169,266,200 shares.
(Woori Bank) relies heavily on Woori Bank for revenue. The diversification follows similar moves by competitors. Woori Bank accounted for 77.1% of the holding firm’s revenue as of the end of 2010.
“We’re aiming to secure leadership in the card issuance business by suggesting a new business model via strategic ties with mobile phone operators, retailers and oil refiners amid a rising market for mobile settlement,” Woori Finance said.
It has become common for banks to spin off their credit card units, enabling them to react faster to market demands and act more aggressively in the competitive credit card market.
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