KBI National Industry will acquire Raon Savings Bank, which had risks of insolvency. This is the first case in which the market's self-restructuring function has operated for local savings banks with heightened insolvency risks.
On the 23rd, the Financial Services Commission convened its 14th regular meeting and announced that it had approved KBI National Industry's acquisition of 60% of Raon Savings Bank's equity. KBI National Industry, a waste management company headquartered in Gumi, North Gyeongsang Province, had total assets of 383.6 billion won and equity of 338.2 billion won as of the end of last year.
KBI National Industry reported a revenue of 61.1 billion won and a net profit of 31.8 billion won last year, indicating a stable financial structure. Financial authorities granted permission for this acquisition after closely examining the debt ratios and criminal records of KBI National Industry and its largest shareholder and representative.
Raon Savings Bank received a management improvement recommendation on Dec. 24 last year as its soundness indicators deteriorated during the normalization process of real estate project financing (PF). Since then, it has been implementing plans for management normalization, including capital increases and asset sales. The Financial Services Commission has deemed KBI National Industry's paid-in capital increase plan and the disposal of non-performing assets reasonable and plans to continue supporting management normalization even after the change of major shareholders.
Financial authorities emphasized the significance of this case, stating, "This is the first example in which the market's self-restructuring function has operated for local savings banks that have received timely correction measures." This strategy aims to induce private corporations to autonomously resolve management crises instead of government-led public assistance, thereby alleviating the burden on policy finance and enhancing the soundness of the financial market.
After monitoring the management normalization efforts of Raon Savings Bank, the Financial Services Commission will officially lift the management improvement recommendation if sufficient improvements are confirmed. The approval conditions include the completion of the scheduled capital increase and achieving performance in disposing of non-performing assets. A Financial Services Commission official noted, "We will lift the measures after voting if conditions are met."
Using this case as an opportunity, the Financial Services Commission plans to continue providing institutional support to promote the acquisition and merger (M&A) of savings banks. Following the announcement of the 'Measures to Enhance the Role of Savings Banks' in March, it has excluded financial holding companies from regular eligibility screenings for major shareholders and expanded the range of exceptions for M&A eligibility criteria (expanding to four business areas). Additionally, for local savings banks, it plans to operate supervision and inspection schedules flexibly to ensure that capital increases and restructuring proceed smoothly.