Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
OK Savings Bank becomes largest shareholder of DGB Financial
DGB Financial Group headquarters in Daegu / Courtesy of DGB Financial Group
By Anna J. Park
Market attention is now drawn on what lies behind OK Savings Bank's surprise emergence as the largest shareholder of DGB Financial Group.
In its electronic public disclosure earlier this week, DGB Financial Group announced that OK Savings Bank has stepped up as the largest shareholder of the group with an 8.49 percent stake, overtaking the National Pension Service (NPS), which has decreased its stake to 7.99 percent. OK Savings Bank's previous stake was 7.53 percent.
As it is the first time that a savings bank has become the largest shareholder of a financial holding company in the country, various interpretations have surfaced regarding the motives and intentions of OK Savings Bank.
Some question whether this is a strategic step toward entering the first-tier financial sector, especially considering the ongoing transition of the group's banking subsidiary, Daegu Bank, into a commercial bank.
Some say the savings bank might actively exercise its shareholder rights over DGB Financial Group, while some question whether it's suitable for the savings bank to be the largest shareholder of the financial group.
In response to rising questions, OK Savings Bank said that its investment in the financial group aims to collect dividend returns.
OK Savings Bank has invested consistently in regional financial holdings, such as its 10.5 percent stake in JB Financial Group, and its investment in DGB Financial Group can be interpreted as a diversification strategy for maximized investment returns amid unfavorable market conditions.
As securities and banking stocks are considered prime dividend stocks, DGB Financial Group demonstrated a high dividend payout ratio of 26.8 percent for the 2022 fiscal year, and the dividend payout ratio has been on the rise lately.
DGB Financial also reiterated its stance. "OK Savings Bank has been investing in various financial stocks for the purpose of dividend returns. As the savings bank has said that the goal is for general investment purposes, it is unlikely that the savings bank intends to exert influence at shareholders meetings," an official from the financial group said.
Considering both entities' statements, it is unlikely that the savings bank would increase its stake further in DGB Financial Group. Korea's mutual savings banking act stipulates that savings banks are limited to holding up to 15 percent stake in a company.
The financial group official added that the group sees no legal or administrative issues in the process of Daegu Bank's planned conversion into a commercial bank, just because the group's largest shareholder has changed.
Yet, the question over the suitability of the largest shareholder will remain, as the Financial Services Commission, the country's top financial regulator, has said that it will examine the suitability of the major shareholders of target financial institutions as part of its assessment process before granting approval for transitioning from a regional to a commercial bank.