Japanese-affiliated J Trust sells capital and savings banks... Can it overcome 'meoktwi' private equity controversy?

JT Capital 100% Stake Scheduled for Sale That Day
Buyer is VI Financial Investment Established by Private Equity Fund
Controversy Over Evasion, Union Opposition, and Financial Supervisory Service Review Obstacles

Japanese financial group J Trust is set to proceed with the sale of JT Capital on the 14th. The plan is to sell all domestic financial companies, including JT Savings Bank, to private equity funds within this year, but controversies over 'Muk-twi' (walkaway) and issues with the Financial Services Commission's review are hindering progress.

According to the disclosure, J Trust is scheduled to transfer 100% of JT Capital's shares to VI Financial Investment on this day. The total transfer price is 116.5 billion KRW, and if the purchase and sale contract is signed today, the actual transfer will take place on June 15. The plan is to agree on the transfer of 100% of JT Savings Bank's shares within three months thereafter.

VI Financial Investment is a financial company established by Banker Street Private Equity (PE), a Hong Kong-based private equity fund operator. It was created by acquiring Hi Asset Management and Hi Investment & Futures.

Although the contract is on the same day, it is uncertain whether it will proceed as planned. According to the financial industry, even 2-3 days before the contract, the J Trust Group had not received a definite answer from VI Financial Investment. The law firm managing the contract stated, "Since this concerns the client and the contract, we cannot confirm anything," leaving the situation still unclear.

There are also observations that VI Financial Investment is concerned about the Financial Services Commission's suitability review for major shareholders. Current law requires approval from financial authorities when selling savings banks. From VI Financial Investment's perspective, which intends to purchase both the capital and savings bank together, failing the review could result in the risk of only failing to acquire the savings bank. In October last year, J Trust signed a memorandum of understanding (MOU) to acquire JT Savings Bank but failed to pass the suitability review.

From 'Muk-twi' Controversy to Criticism of 'Cunning' Acquisition

Moreover, the labor union has raised the 'Muk-twi' controversy against J Trust. The argument is that the Japanese financial company gains huge profits through high-interest loans domestically and then withdraws from the market. Another point of opposition is that private equity funds often increase corporate value by restructuring and issuing cash dividends after acquiring companies, then resell them.

The JT Savings Bank labor union held a press conference in front of the Financial Supervisory Service headquarters on the 11th, stating, "Businesses acquired by private equity funds are typically followed by restructuring and high-rate dividends," and argued, "If savings banks realize profits based on deposits from ordinary citizens, private equity funds should be disqualified from bidding."

There is also criticism that the attempt to sell the savings bank and capital together at once is a 'cunning' move. There are concerns that VI Financial Investment will first purchase the capital, which does not require regulatory approval, and then indirectly acquire the savings bank through the capital company.

A JT Capital labor union official also warned at the press conference, calling it "a malicious loophole acquisition by private equity funds," and said, "If private equity funds acquire JT Capital, they will gather funds using JT Capital without spending a single penny and reap profits."

This content was produced with the assistance of AI translation services.