Sangsangin files lawsuit against FSC over 'stock sale order' refusal... "Acquisition aimed at increasing negotiation power"

Second Administrative Lawsuit Against Financial Services Commission's Decision
New Buyer Needed After Woori Financial Acquisition Falls Through

Sangsangin has filed an appeal lawsuit against the Financial Services Commission (FSC), which ordered the sale of shares in Sangsangin and Sangsangin Plus Savings Banks. Analysts suggest this move is aimed at 'buying time' to strengthen negotiation power for the acquisition price.

On the 27th, Sangsangin announced that it had filed a cancellation lawsuit and requested a suspension of the effect regarding the FSC's order to meet major shareholder eligibility requirements and the order to dispose of shares. In August this year, the FSC issued an order to Sangsangin to meet major shareholder eligibility requirements, and, judging that Sangsangin failed to meet these requirements, notified an order in October to dispose of 11.34 million shares of Sangsangin Savings Bank and 5.78 million shares of Sangsangin Plus Savings Bank by April 4 next year.

This is the second time Sangsangin has filed an appeal lawsuit against the FSC's disposition. In 2019, the FSC imposed fines on the two savings banks and suspended the duties of CEO Yoo Jun-won of Sangsangin for three months, citing false reporting on compliance with credit extension obligation ratios and providing unfair benefits by acquiring convertible bonds at a low price. Sangsangin filed a lawsuit claiming the disciplinary action was excessive. The Supreme Court ruled in May that the FSC's disciplinary action was lawful.

Sangsangin stated, "Apart from this administrative lawsuit against the administrative disposition, we are reviewing the sale of Sangsangin Savings Bank and Sangsangin Plus Savings Bank."

Within the industry, many view Sangsangin's second administrative lawsuit as a 'time-buying' tactic. Since the sale of shares has become inevitable, Sangsangin is trying to buy time through litigation to increase its price negotiation power. An industry insider explained, "If pressured by the sale deadline, the acquisition negotiations will inevitably be disadvantageous."

With Woori Financial Group's acquisition of Sangsangin-affiliated savings banks finally falling through, Sangsangin now faces the situation of having to find a new buyer. Woori Financial selected Samil Accounting Corporation as an advisor and even conducted due diligence but recently decided not to proceed with the acquisition. The reasons are reported to include the real estate project financing (PF) defaults of Sangsangin Savings Bank.