Kyobo Life poised to buy Japan’s SBI Group-owned savings bank

Kyobo Life Insurance Co. is in the final stages of negotiation with Japanese financial group SBI Holdings Inc. to buy about a 50% stake in SBI Savings Bank, the largest savings bank in South Korea, according to financial industry sources on Thursday.

Kyobo, South Korea’s No. 3 life insurance company, will finalize the deal worth about 1 trillion won ($700 million) at its extraordinary shareholder meeting next week. The share purchase will likely be carried out in phases over the next one to two years, said the sources.

The move is expected to give fresh impetus to Kyobo’s push to transform into a holding company and revive its long-delayed initial public offering plan by adding a banking arm to its portfolio focused on non-banking services.

“We’re in talks with SBI Holdings, but details such as the size of the stake have not yet been finalized,” said a Kyobo Life official.

After clinching the deal, it will jointly manage the company with SBI Holdings, which currently owns 100% of the savings bank, for the time being.

With assets of 14 trillion won and an equity capital of 1.9 trillion won, SBI Savings Bank has outpaced the country’s smallest lender, Jeju Bank. Its assets are nearly double Jeju Bank’s 7.4 trillion won as of the end of 2024.  

Unlike full-service domestic financial groups such as KB, Shinhan, Woori and Hana, Kyobo lacks units like a commercial bank, credit card issuer, non-life insurer or a capital services company offering credit loans.

Kyobo Life Insurance's shareholdings in subsidiaries
Company name	Stakeholding (%)
Kyobo Securities Co.	84.7
Kyobo Asset Trust Co	100
Kyobo Lifeplanet Life Insurance Co.	100
Kyobo AXA Investment Managers Co.	50
Pavilion Asset Management Co.*	100
(In 2023, it acquired Pavilion, a Korean alternative investment firm)

PROJECT FINANCING LOANS

SBI Saving Bank has been largely shielded from the project financing turmoil. It has steered clear of loans for construction projects, drawing lessons from Japan’s real estate bubble collapse.

In 2024, the country's 79 savings banks incurred losses of a combined 397.4 billion won as their loans extended to construction projects turned sour.

However, SBI Savings Bank bucked the trend with a net profit of 80.8 billion won in 2024.

Its loan delinquency ratio stood at 4.97% in 2024, about half the sector’s average of 8.52%. That also compares with the delinquency ratios of 9.05% and 8.13% of the sector’s No. 2 and No. 3 players OK Savings Bank and Korea Investment Savings Bank, respectively.

In 2013, SBI Holdings took over the troubled Hyundai Swiss Savings Bank – later renamed SBK Savings Bank – then still reeling from the fallout of the subprime loan crisis.

It has since injected a total of 1.3 trillion won into the Korean savings bank through rights issues.

Kyobo Life and SBI Group have broadened their collaboration since 2022, expanding from venture capital and fintech into digital finance technology and security token development.

Shin Chang-jae, chairman and CEO of Kyobo Life, is known to have close ties with Kitao Yoshitaka, CEO of SBI Holdings, founded in 1999.

RELIEF PITCHER FOR KYOBO

SBI Holdings recently stepped in as a relief pitcher to help Kyobo Life resolve a years-long dispute with private equity shareholders over a put option the insurer had granted them.

In March, it purchased a 9.05% stake in Kyobo from Affinity Equity Partners to facilitate the latter's exit from the insurer after a 13-year investment. SBI Holdings plans to raise its stake in Kyobo to 20%.

Kybo aims to finalize its transition to a holding company structure by next year after securing regulatory approval.

Write to Hyeong-Gyo Seo and Jong-Kwan Park at seogyo@hankyung.com
 

Yeonhee Kim edited this article.