Savings banks, once seen as a burden in the mergers and acquisitions (M&A) market due to low profitability and accumulated bad debt, have shed much of their trouble and are now receiving renewed interest. After Kyobo Life Insurance acquired SBI Savings Bank, the industry's No. 1, the M&A market for savings banks is heating up in earnest.
According to the financial sector on the 4th, Meritz Financial Group, Hanwha Life Insurance, and Baikal Investment—selected for the shortlist of qualified bidders to acquire Aequon Capital and Aequon Savings Bank—are conducting due diligence to participate in the main bid. The sell-side advisors, including UBS and Citigroup Global Markets Securities, are said to be planning to hold the main bid at the end of this month.
Meritz and Hanwha are seeking to expand their footprint in finance by acquiring Aequon. Meritz aims to diversify the group portfolio by acquiring a savings bank, while Hanwha is seen as expecting synergy with its existing Hanwha Savings Bank.
The market expects the sale price for the 96% equity in Aequon Capital and 100% equity in Aequon Savings Bank held by EQT Partners to reach 1 trillion won. However, considering the bidder's price burden, some expect the final price could be lower. As of the end of last year, Aequon Savings Bank had assets of 5.0177 trillion won, ranking fifth in the industry.
KBI Group, which previously acquired Raon Savings Bank, is also pushing to acquire Sangsangin Savings Bank. The deal was initially expected to close last month, but the timeline appears to be slipping somewhat due to factors such as capital raising and regulatory approval reviews.
Taekwang Group is also reported to be reviewing the acquisition of Pepper Savings Bank. Pepper Savings Bank engaged in acquisition talks with OK Financial Group last year, but negotiations ultimately fell through and the sale process was halted. Taekwang Group owns Goryeo Savings Bank and Yegaram Savings Bank. Its strategy is to expand its position in the industry through additional acquisitions.
Finda, a loan brokerage Fintech company, is also pursuing the acquisition of Daewon Savings Bank. It is currently discussing M&A procedures and structure with a domestic accounting firm.
As savings bank M&A activity picked up from the end of last year, large savings bank assets for sale have virtually disappeared from the market. In 2024, due to bad debt in real estate project financing (PF), the delinquency rate neared 10%, piling savings bank assets onto the M&A market, but the situation has reversed.
Savings banks aggressively cleaned up bad real estate PF assets last year and returned to the black for the first time in three years. As bad debt fell, corporations seeking to enter the financial industry are showing interest in savings banks, which can be acquired at relatively low expense. The financial authorities also moved to ease regulations, including expanding the scope of M&A eligibility, to induce swift restructuring in the savings bank sector.
A financial sector official said, "Savings banks have regional business area limits, but by acquiring multiple savings banks, one can effectively secure deposit and loan business rights on par with commercial banks," adding, "There is an advantage in being able to secure a nationwide financial sales network at relatively low expense."