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| gettyimagesbank |
By Lee Yeon-woo
Major financial group leaders are actively purchasing treasury shares as a gesture of their commitment to taking a more hands-on approach to corporate management. At the same time, these actions are seen as an attempt to support their undervalued stocks.
On Wednesday, Woori Financial Group Chairman Yim Jong-yong acquired the group's shares for the first time since his appointment in March. He bought 10,000 stocks valued at 118.8 million won ($89,112), as reported by the group.
"Following Yim's initial acquisition of treasury stocks, the group aims to deepen its engagement with shareholders and the wider market. We will also focus on strengthening the group's core business capabilities to drive positive outcomes and raise corporate value," a Woori Financial Group official stated.
Earlier this month, Hana Bank CEO Lee Seung-lyul also acquired 1,000 shares of the company's stocks at 39,500 won per share. It was his third purchase of treasury stocks this year. He bought 100 and 1,000 shares of the bank in March and April, respectively.
Among the major financial groups, KB Financial Group Chairman Yoon Jong-kyoo leads with the largest holding of treasury stocks at 21,000 shares. He's closely followed by Shinhan Financial Group Chairman Jin Ok-dong, who possesses 18,937 shares of the group's stocks. Hana Financial Group Chairman Ham Young-joo is next in line with 11,132 shares.
In the realm of bank CEOs, Shinhan Bank's Jung Sang-hyuk stands out for his proactive approach to acquiring treasury stocks. Since taking up his position in February, he has made three separate share purchases, accumulating a total of 8,551 shares, which are valued at approximately 339.9 million won. Woori Bank's Cho Byung-kyu, Hana Bank's Lee and KB Kookmin Bank's Lee Jae-keun follow suit.
Observers are keenly watching whether the active acquisition of treasury shares by the leaders will lead to a rebound in the stock prices of the financial groups. These shares are perceived as significantly undervalued, especially given that the average price-to-book ratio (PBR) for major financial groups is currently at 0.33. This figure is even lower than the average observed during the 2008 global economic crisis.
To boost stock prices, the banking industry announced proactive policies starting this year that aim to enhance shareholder returns. The measures include share buybacks, the retirement of company shares, and the regular payments of quarterly dividends.
However, some experts argue that purchasing treasury stocks doesn't directly enhance the stock's value unless there is also a retirement of those stocks.
"If a company maintains its treasury stocks without retiring them and later chooses to sell them on the market, the count of outstanding shares will inevitably rise again," Kang So-hyun, a researcher at the Korea Capital Market Institute, noted in a report. "It's only when the acquired treasury shares are retired, causing a permanent decrease in the total issued shares, that shareholders can anticipate a lasting increase in shareholder value."
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