Will Kyobo’s SBI takeover revive interest in struggling savings banks?

A woman walks past savings bank signs in Seoul, March 21. Yonhap

By Jun Ji-hye

• Published Apr 30, 2025 4:21 PM KST

Industry calls for relaxed regulations to revitalize M&A market

Kyobo Life Insurance’s acquisition of SBI Savings Bank — the largest player in Korea’s savings bank industry — has drawn interest in whether the deal could revitalize mergers and acquisitions (M&As) in the sector, which has been grappling with declining profitability and worsening asset quality, industry officials said Wednesday.

There are currently 79 savings banks operating in Korea, but many are small in terms of loan volume and face rising delinquency rates, prompting ongoing calls for industry-wide restructuring.

Insiders say it may take time for the M&A market in the savings bank sector to gain meaningful momentum, as the industry remains in a slump with few players willing to jump in.

They noted that Kyobo Life’s acquisition of SBI is considered an exceptional case, largely due to the bank’s strong position in the industry and its long-standing business ties with the insurer.

On Monday, Kyobo’s board of directors approved a plan to gradually acquire a 50 percent plus one share stake in SBI Savings Bank by October 2026. The shares will be purchased from SBI Holdings, a Japanese financial group and the bank’s majority shareholder, at a price of around 900 billion won ($633 million).

SBI ranks No. 1 in the industry, with total assets of approximately 14 trillion won and a customer base of 1.72 million as of December last year.

Since the latter half of 2022, however, the entire savings bank sector has faced unfavorable conditions due to a sharp rise in delinquency ratios on real estate project financing loans.

According to Financial Supervisory Service data, Korea's 79 savings banks reported a combined net loss of 397.4 billion won last year, marking two consecutive years of losses.

Currently, the only financial institution considering an acquisition in the savings bank sector is OK Financial Group, which is aiming to acquire Pepper Savings Bank or Sangsangin Savings Bank. However, the process has been slow.

In 2017, financial authorities enforced M&A regulations for savings banks to prevent reckless expansion. However, in response to concerns about the real estate project financing crisis, the authorities eased M&A approval criteria in July 2023 to promote restructuring. Despite these changes, many believe that it is still insufficient to spur active M&As.

At a press briefing on March 21, Oh Hwa-kyung, chairman of the Korea Federation of Savings Banks, urged financial authorities to further relax regulations on M&As, noting that a considerable number of mid-size companies are interested in acquiring savings banks.

"Although the authorities have made some progress in easing regulatory constraints, a clearer opening of the sales market could facilitate the replacement of underperforming banks with institutions possessing stronger capital," Oh said.

The industry is calling in particular for the relaxing of regional business area regulations. Under the Mutual Savings Banks Act, the country is divided into six regions and savings banks are restricted to operating within specific geographic areas.

Due to economic and cultural infrastructure being concentrated in Seoul and its surrounding areas — Gyeonggi Province and Incheon — banks in other regions have seen their performance plummet.

"If the local economy struggles, savings banks in that area will inevitably face challenges. Without relaxing the business area restrictions, it will be difficult to stimulate M&A activity," an official in the savings bank industry said.