Loan Balances Stagnate or Contract... Delayed Sale of JT Savings Bank and Capital (Comprehensive)

Savings Bank Loan Balance Stagnates, Capital Companies Shrink
Some Say "Uncertainty Arises if Sale Process Becomes Visible"
JT Savings Bank "Difficult to See Impact from Sale Case"

[Asia Economy Reporter Song Seung-seop] The sale process of JT Savings Bank and JT Capital has been delayed beyond the original plan, and it has been identified that the loan balances of the two financial companies have either stagnated or contracted. Analysts suggest that the sale process has affected loan growth, despite the savings bank industry enjoying a boom.

According to Japan Financial Group J Trust on the 18th, JT Savings Bank's loan balance last month was 1.5586 trillion KRW, down 13.3 billion KRW from 1.5719 trillion KRW the previous month. Compared to 1.5417 trillion KRW at the beginning of this year, it only increased by 16.9 billion KRW, indicating sluggish growth. This contrasts with the same period last year (January to May). The loan scale, which was around 1.2461 trillion KRW, increased by 69.1 billion KRW to 1.3152 trillion KRW. By the end of the year, it rapidly grew to 1.5027 trillion KRW.

In the case of JT Capital, the trend is rather a contraction. The group revealed that JT Capital's 'operating loan balance' was 454.2 billion KRW last month, down from 470.2 billion KRW at the beginning of the year. This marks a 15-month consecutive shrinkage in loan size. Compared to 617.3 billion KRW in January last year, it decreased by 163.1 billion KRW (26.4%).

Accordingly, there is an interpretation that the ongoing sale process of the two financial companies by J Trust has had some impact. Especially in the savings bank industry, loan sizes are rapidly increasing, lending credibility to this observation. Professor Kim Dae-jong of the Department of Business Administration at Sejong University said, “In the past, the financial industry took measures to prevent existing customers from leaving as the sale process became visible,” adding, “Since there is uncertainty about the trustworthiness of the new owner after the sale and what financial policies they will implement, there will likely be negative effects.”

Delay in Raising Investment Funds... Stalled Sale Calendar

JT Savings Bank stated that the eased loan growth cannot be directly linked to the sale attempt. They explained that no sale-related contract has been signed yet and that the sale does not significantly affect financial consumers. A JT Savings Bank official emphasized, “The loan balance reflects various factors such as managing the loan-to-deposit ratio,” adding, “In terms of products, unsecured loans chosen by customers increased from about 580 billion KRW at the end of last year to about 650 billion KRW, and loans slowed down due to a strategic reduction in private bond company investments.” They further added, “We believe consumers did not primarily consider the sale when choosing loans.”

J Trust Group, the parent company of JT Savings Bank and JT Capital, has announced plans to sell the two domestic financial companies to VI Financial Investment, a Hong Kong-based private equity fund. Initially, VI Financial Investment planned to acquire JT Capital first and then acquire the savings bank. Under the premise that the JT Capital transfer is completed, they intended to acquire the savings bank within three months and complete the major shareholder suitability review by February next year.

However, the deadline for VI Financial Investment to pay the remaining balance for the JT Capital purchase (the 15th of this month) has been postponed. It is known that VI Financial Investment's due diligence on the capital was completed earlier this month, but the process of raising investment funds was delayed.

J Trust Group stated through a disclosure, “Overall due diligence is delayed, and the buyer is changing to a special purpose company (SPC) under VI Financial Investment, so it is expected to take time until the transaction is completed,” adding, “The transaction completion date is expected to be the end of August, and the entire schedule, including the stock transfer, is also expected to be postponed by a similar period.”

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