Financial investors are closely watching developments with South Korean savings banks following strong bidding interest from private equity (PE) firms for JT Savings Bank, encouraged by indications that regulatory hurdles will be eased.
Law firm Kim & Chang held the final round of bidding for JT Savings Bank on Tuesday (September 15), industry sources said. Japan-based J Trust Group, which is disposing of the bank, is expected to select the preferred bidder fairly soon from two shortlisted companies, including local firm BankerStreet PE.
Industry sources said the sale had focused more interest on savings banks, which are valued highly because of their stable cashflows and strong positions in some business services. In particular, mid-sized PE firms are actively seeking to acquire savings banks to build their track records.
The acquisition activity comes despite a requirement that any firm wanting to become a major shareholder in a savings bank must receive approval from the Financial Services Commission (FSC), which has scuttled previous deals and made some financial investors hesitate to join the race.
In one instance, Smart Investment Partners failed to win regulatory approval for the purchase of Smart Savings Bank and it was sold instead to a consortium of Mirae Techwin and Mirae Korea.
Market insiders said that the FSC will allow PE firms to purchase savings banks if they have clear financing and management plans. More savings banks are expected to be put up for sale following the announcement by financial authorities earlier this year that restrictions on business combinations in the market would be eased.
Advisory firms are ready to capitalize with mandates for handling sale processes. (Reporting by Ar-rum Cho)