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Securities firms rush
Securities firms rush to acquire savings banks
A growing number of medium-sized securities firms in Korea have been acquiring savings banks lately to stabilize and diversify their profits.

SK Securities acquired a 93.57 percent stake in MS Savings Bank recently for roughly 39 billion won ($35 million). The brokerage announced its intention last Thursday to buy 4.3 million shares of the savings bank for cash. The money spent on the acquisition accounts for 6.72 percent of the brokerage firm's own capital.

SK Securities said in the announcement 안전놀이터 it "hopes to increase profits by expanding its business into the savings bank industry." MS Savings Bank, headquartered in Daegu, achieved an annual net profit of 560 million won last year.

KTB Investment & Securities also announced earlier this month that it decided to acquire a 30 percent stake in Eugene SB Holdings, becoming the largest shareholder. Eugene SB Holdings holds a 100 percent stake in Eugene Savings Bank, a major bank in the industry that achieved a net profit of 51.9 billion won last year.

"By acquiring Eugene Savings Bank, KTB Financial Group could expand its services to retail financing, further diversifying our profit structure," the company said in a statement.

The brokerage is paying around 73.2 billion won for the 30 percent stake, or 12.9 million shares. But the final number could change in the process of the acquisition.

Both acquisition plans by SK Securities and KTB Investment need to receive the green light from the Financial Services Commission (FSC), while market watchers do not anticipate any hitches.

VI Investment, an investment firm specializing in derivatives headquartered in Korea, also seeks to acquire JT Savings Bank as well as JT Capital, despite a failed attempt in the past following an evaluation by the Financial Services Commission (FSC).
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Win-win game for both

As they stated in announcements and statements, the medium-sized securities firms are rushing to acquire savings banks to stabilize and diversify their profit models amid heated competition.

While large securities firms in the country continue to strengthen their lead in areas of corporate investment banking, such as IPO deals as well as retail brokerage, medium-sized securities firms have been focusing on securing stable and lucrative profit sources. They hope to create synergy with the savings banks they acquire.

KTB Investment, in particular, hopes to expand its business model towards retail financing, which will add more stability to its existing focus on venture capital investments.

In addition, the cash holdings of savings banks could strengthen these securities firms' credit businesses by increasing stock loan programs. The capital reserves of the acquired savings banks will allow the mid-sized brokerages to provide more stock loans to customers.

Kiwoom Securities' acquisition of TS Savings Bank five years ago led brokerage to boost its market share by strengthening stock loans to customers.

Savings banks also offer handsome dividends to investors, which is another reason for the acquisitions. Eugene Savings Bank has been paying out an average of 8.9 billion won per year, which will be a stable cash source for KTB Investment.

On the part of the savings banks, being bought by a mid-sized brokerage can be a win-win game by providing access to more customers. Savings banks have been witnessing more customers' money flow into other markets like equities or cryptocurrencies in search of higher returns as bank deposit interest rates remain low.
Securities firms rush
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Securities firms rush

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Published: