Activist fund Align Partners on the 14th publicly proposed a merger between JB Financial Group and BNK Financial Group.
Align Partners said it held a press briefing to launch a new finance campaign that day and sent an open letter to shareholders requesting that the boards of JB Financial Group and BNK Financial Group establish a special committee composed only of independent directors, appoint a global investment bank and a strategy consulting firm as advisors, review the validity of a merger between the two companies, and disclose the results.
As of the 10th, Align Partners holds 14.83% equity in JB Financial Group and more than 1% equity in BNK Financial Group through funds it manages.
Lee Chang-hwan of Align Partners said, "This proposal is not to immediately push for a merger between the two companies, but a request for the boards of both companies to conduct an independent and professional review for the benefit of the company and all shareholders and to disclose the results to shareholders."
Align Partners assessed that JB Financial and BNK Financial, the two remaining regional financial holding companies in Korea, are facing a long-term structural crisis.
In particular, with population decline due to aging and the economy concentrating in the greater Seoul area, the market position of regional banks has been continuously weakening, leading to the view that a merger of the two financial holding companies is necessary.
Lee said, "Only integration between the two regional financial holding companies, whose business territories and portfolios complement each other, is the only market-driven solution that guarantees the long-term survival of regional banks," adding, "Such integration is not an unprecedented attempt, but a path already taken by Korea's banking industry, where today's financial groups were formed through post-crisis bank mergers, transitions to financial holding company structures, and appointments in nonbank affiliates after the foreign exchange crisis."
Align Partners then requested that the two companies set up a special committee composed of independent directors and appoint a global investment bank and a strategy consulting firm to review the strategic and financial validity of a merger between the two.
It also asked them to reply by Aug. 7 on whether they will begin the review, and if they do, to publicly announce the results and execution plan by the third-quarter earnings release.
Lee said, "We explained this to both companies in advance through investor relations (IR), and if they refuse to review for reasons that are hard to accept, we are considering exercising the necessary shareholder rights."