[비즈한국] Merger negotiations for Sangsangin038540 Savings Bank, which were believed to be in the final stages, have suddenly hit a deadlock. OK Financial Group has been simultaneously pursuing the acquisition of both Sangsangin Group’s Sangsangin Savings Bank and Pepper Group’s Pepper Savings Bank. Although reports surfaced in July indicating that the acquisition of Sangsangin Savings Bank was nearing completion, negotiations have recently been suspended. With both sides offering differing accounts for the suspension, and with negotiations for Pepper Savings Bank also reportedly stalling, attention is shifting to whether these acquisitions will ultimately succeed.
OK Financial’s foray into savings bank acquisitions is facing headwinds. While OK Financial had been pursuing the acquisition of both Sangsangin Savings Bank and Pepper Savings Bank simultaneously, reports suggest that the negotiations have recently fallen through. The target whose sale is known to have collapsed is Sangsangin Savings Bank.
OK Financial began pursuing the acquisition at the end of 2024, including conducting due diligence on Sangsangin Savings Bank. Subsequently, it had been coordinating details such as price negotiations. Although media reports in July suggested that negotiations between OK Financial and Sangsangin were in the final stages, it is now understood that they have recently been halted.
There is much speculation regarding the reason for the halt. An industry insider stated, "I understand that the negotiations were suspended because Sangsangin sought other potential buyers while in the middle of talks with OK Financial." On the other hand, a Sangsangin Group official remarked, "The sale of Sangsangin Savings Bank is continuing. We plan to sell it once a suitable buyer appears and are currently in talks with multiple interested parties."
In essence, OK Financial claims it was suddenly notified that there were other targets after months of negotiation, whereas Sangsangin maintains that since no preferred bidder was finalized, it is pursuing a sale with whichever party offers the most favorable terms.
Whether the acquisition of Pepper Savings Bank will be completed successfully is also uncertain. OK Financial conducted due diligence on Pepper Savings Bank in March and has been in negotiations since. While an OK Financial representative replied, "Acquisition negotiations with Pepper Savings Bank are ongoing," the process is reportedly sluggish. Some media outlets have even reported that the acquisition of Pepper Savings Bank has effectively collapsed as well.
With setbacks in both acquisitions, the anticipated shake-up in the savings bank sector is expected to be delayed. As of 2024, OK Savings Bank holds approximately 13 trillion won in assets, ranking it second in the industry. If it were to successfully acquire the 7th-ranked Pepper Savings Bank (approx. 3 trillion won), it could surpass the long-standing industry leader, SBI Savings Bank (approx. 14 trillion won), to take the top spot.
The opportunity for expanding business territory has also moved further away. Pepper Savings Bank was established in 2013 by acquiring Neulpureun Savings Bank, which had branches in Ansan and Bundang, Gyeonggi Province, in October, and Honam-based Hanwool Savings Bank in December of the same year. OK Savings Bank's current business footprint is in Seoul, Chungcheong, and the Honam region; acquiring Pepper would have allowed it to expand into Gyeonggi Province.
However, it does not mean that the acquisition of Sangsangin Savings Bank is entirely off the table, as Sangsangin has no choice but to continue pursuing the sale of its stake. In October 2023, the Financial Services Commission ordered Sangsangin to sell more than 90% of its shares in Sangsangin Savings Bank and Sangsangin Plus Savings Bank (a stock disposal order). This followed a severe disciplinary action of a three-month suspension for Sangsangin Group Chairman Yoo Joon-won due to allegations including illegal lending, which caused issues regarding the maintenance of major shareholder eligibility. Sangsangin holds a 100% stake in both Sangsangin Savings Bank and Sangsangin Plus Savings Bank, and Chairman Yoo is the largest shareholder with a 22.67% stake in Sangsangin.
Following the Supreme Court’s confirmation of the suspension, the Financial Services Commission issued the stock disposal order in accordance with major shareholder eligibility requirements under the Mutual Savings Bank Act. While the law specifies a six-month deadline for disposal, the timeline was extended after Sangsangin filed an administrative lawsuit challenging the order. Having lost the first trial, Sangsangin is currently in the midst of a second trial.
Meanwhile, OK Financial has been engaging in M&As and investments in various financial firms in line with Chairman Choi Yoon's goal of leaping into a comprehensive financial group, but the situation is not proving easy. At the end of 2024, when the domestic activist private equity firm KCGI moved to acquire Hanyang Securities, OK Financial joined the fray as a financial investor (FI) through OK Savings Bank. OK Financial had previously shown interest in securing securities firms and asset management companies ahead of its transition to a comprehensive financial group.
However, as financial authorities delayed approval for the change in major ownership due to concerns over OK Financial's "backdoor acquisition," KCGI eventually received approval five months after applying, having pledged that it would be solely responsible for managing Hanyang Securities for five years and that OK Financial would waive its right of first refusal. In effect, OK Financial is now further away from securing a securities firm.
Some also view the legacy of the group, which originated from the loan business, as a negative factor. An industry insider noted, "I understand that there were concerns among Sangsangin Savings Bank employees when news of the potential acquisition by OK Financial became known."