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Rating Action:

Moody's assigns (P)Ba2 (hyb) to Woori Bank's Additional Tier 1 notes

 The document has been translated in other languages

29 May 2015

NOTE: On 29 May 2015, the press release was corrected as follows: In the Affirmed ratings list, removed the (hyb) indicator from the (P)Baa3 foreign currency Basel III compliant subordinated MTN rating. Revised release follows:

Hong Kong, May 29, 2015 -- Moody's Investors Service has today assigned a (P)Ba2 (hyb) rating to the proposed USD non-cumulative additional Tier 1 notes (AT1 securities) to be issued by Woori Bank (deposits A1/senior unsecured A1 negative, BCA baa2).

The (P)Ba2 (hyb) rating assigned to the proposed AT1 securities is notched off Woori Bank's baa2 adjusted baseline credit assessment (BCA), which is the same as its baa2 BCA.

The rating of the AT1 notes is placed three notches below the bank's baa2 adjusted BCA, in line with Moody's framework for rating non-viability contingent capital securities.

Woori's proposed AT1 securities are subject to a full write down upon the occurrence of a trigger event. In addition, coupons are skipped on a non-cumulative basis at the issuer's option, and on a mandatory basis subject to availability of distributable items.

At the same time, Moody's has affirmed the long- and short-term ratings of Woori Bank. A full list of the affected ratings can be found at the end of this press release.

For its own business reasons, Moody's has withdrawn the outlooks on all of the bank's junior instrument ratings. For more information, please refer to "Moody's Investors Service's Policy for Withdrawal of Credit Ratings," available at moodys.com. The long-term deposit and senior unsecured ratings carry a negative outlook.

RATINGS RATIONALE

The (P)Ba2 (hyb) rating has two main drivers. First, the anchor for the rating is the standalone creditworthiness of Woori Bank, plus any rating uplift for affiliate support, if applicable. For Woori Bank, the standalone credit strength is reflected in the baa2 BCA.

Second, in-line with Moody's methodology for rating non-viability contingent capital securities, the rating for the proposed AT1 securities is three notches below this anchor point of baa2, which positions the rating at (P)Ba2 (hyb). This captures instrument-specific risks, including the risks of mandatory and/or discretionary coupon suspension, and the contractual loss-absorption features in combination with the AT1 securities' deeply subordinated claim in liquidation.

The proposed AT1 securities are contractual non-viability securities. The principal of the securities will be written down in full with no chance of recovery if the issuer is designated as "insolvent financial institution" 'pursuant to the Act on Structural improvement of the Financial Industry. In liquidation, they are senior only to equity shares and coupons are skipped on a non-cumulative basis at the issuer's option, and on a mandatory basis subject to availability of distributable items.

Moody's subscribers may access new issue report on Woori Bank's AT1 securities here: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_181749

WHAT COULD CHANGE THE RATING UP/DOWN

The rating of this instrument could be upgraded if Moody's were to adjust the baa2 adjusted BCA of Woori Bank upwards. The bank's BCA could rise if (1) its net income to tangible assets ratio exceeds 0.8%, (2) its problem loans to gross loans ratio falls below 1% or (3) its tangible common equity to risk weighted assets exceeds 15%.

Conversely, downward pressure on the rating of this instrument could materialize if the baa2 adjusted BCA of Woori Bank were to be adjusted downward. The bank's BCA could be lowered if (1) its net income to tangible assets ratio falls below 0.2%, (2) its problem loans to gross loans ratio rises to 3% or (3) its tangible common equity to risk weighted assets ratio falls below 8%. If there was an increase in the probability of a coupon suspension, Moody's would also reconsider the rating level.

AFFIRMED RATINGS

Long-term foreign currency deposits rating of A1 (negative outlook)

Long-term foreign currency senior unsecured/senior unsecured MTN ratings of A1/(P)A1 (negative outlook)

Short-term foreign currency deposit rating of P-1

Short-term foreign currency commercial paper/other short-term ratings of P-1/(P)P-1

Woori Bank London Branch's short-term foreign currency commercial paper rating of P-1

Foreign currency Basel III compliant subordinated debt rating of Baa3(hyb)

Foreign currency Basel III compliant subordinated MTN rating of (P)Baa3

Foreign currency Basel II subordinated debt rating of Baa1

Foreign currency Basel II junior subordinated MTN rating of (P)Baa2

Foreign currency preference stock non-cumulative rating of Ba2 (hyb)

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks published in March 2015. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Woori Bank headquartered in South Korea, had assets of KRW270 trillion or USD244 billion as of 31 December 2014.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

The first name below is the lead rating analyst for this Credit Rating and the last name below is the person primarily responsible for approving this Credit Rating.

Sophia Lee
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Stephen Long
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Moody's assigns (P)Ba2 (hyb) to Woori Bank's Additional Tier 1 notes
No Related Data.
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