Fitch: Woori Bank news crimps confidence

Fitch Ratings said news that Woori Bank's would not be calling its lower tier II subordinated notes of $400 million (5 ¾%, issued in 2004 and due in 2014) will hamper the rebuilding of market confidence in Korea's banking sector.

While the decision has secured the $400 million for Woori until 2014 at a much lower cost than re-issuance, the market was clearly disappointed by the decision and surprised, presuming a re-issuance could have been arranged under a government guarantee or even directly to the government, Fitch said.

The agency said it believes the non-call may further dent investor confidence in the foreign-exchange funding ability of Woori and other Korean banks and will render more difficulties for the banks to raise foreign-exchange funds from the capital market at economically viable pricing.

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