Sangsangin to Exit Savings Bank Business...? Financial Services Commission Orders "Major Shareholder Eligibility Compliance"

If Major Shareholder Status Not Resolved Within 2 Weeks, Sale Order Issued

The financial authorities have issued a 'Major Shareholder Eligibility Compliance Order' to Sangsangin, the major shareholder of Sangsangin and Sangsangin Plus Savings Banks. If the order is not complied with within two weeks, the two savings banks are expected to effectively proceed with a sale.

According to the financial sector on the 30th, the Financial Services Commission held a regular meeting and resolved to issue the 'Major Shareholder Eligibility Compliance Order' to Sangsangin, the major shareholder of Sangsangin and Sangsangin Plus Savings Banks. This order requires the major shareholder to meet eligibility criteria within a certain period (two weeks) to maintain the savings bank business. If this issue is not resolved, it may be judged that the major shareholder qualification is lost, and Sangsangin could be ordered to dispose of all shares except for 10% ownership.

The issuance of the major shareholder eligibility compliance order to Sangsangin is related to past illegal activities of the two savings banks. In 2019, the Financial Services Commission imposed fines on the two savings banks and a three-month suspension on CEO Yoo Jun-won of Sangsangin, citing false reporting on compliance with credit extension obligation ratios and providing unfair benefits by acquiring convertible bonds at a low price. The two savings banks and CEO Yoo filed lawsuits against the Financial Services Commission's sanctions, but the Supreme Court ruled in May that the Financial Services Commission's disciplinary actions were lawful.

Industry insiders believe that since the heavy sanctions are difficult to resolve within two weeks, a sale order is likely to be issued. If the Financial Services Commission reviews the major shareholder eligibility and issues a forced sale order, the two savings banks are highly likely to be put on the market.

As of the end of March, Sangsangin and Sangsangin Plus Savings Banks had assets of KRW 3.2867 trillion and KRW 1.5637 trillion, respectively, making them the 7th largest in the industry combined. Both savings banks are 100% owned by Sangsangin, whose major shareholder is CEO Yoo, holding a 23.33% stake.