Civic groups, including the Busan Citizens' Solidarity for Decentralization and Balanced Development, hold a press conference Tuesday at the Busan City Council briefing room, condemning an activist fund's attempts to undermine sustainable regional finance and balanced development, and calling for an immediate halt. [Busan = Jung Min-hye]
Civic groups, including the Busan Citizens' Solidarity for Decentralization and Balanced Development, hold a press conference Tuesday at the Busan City Council briefing room, condemning an activist fund's attempts to undermine sustainable regional finance and balanced development, and calling for an immediate halt. [Busan = Jung Min-hye]

Busan civic groups have moved to block an activist fund's push to merge two regional financial holding companies.

The Busan Citizens' Solidarity for Decentralization and Balanced Development and the nonprofit Decentralization and Balance held a press conference Tuesday morning at the Busan City Council briefing room, condemning activist fund Align Partners' attempt to engineer a merger between BNK Financial Group and JB Financial Group and urging an immediate halt.

In a statement read by standing representative Park Jae-yul, the solidarity group said Align Partners was "undermining the role and public character of regional financial institutions through demands that pursue only short-term gains — including expanded dividends, buybacks and an irrational merger." It added that "an activist fund can leave the market at any time after realizing its investment returns, but regional banks carry the responsibility of supporting the local economy."

The groups said regional banks are "the financial safety net for local businesses, small merchants, the self-employed and residents, and a core infrastructure sustaining the regional economy." They added that with capital increasingly concentrated in Greater Seoul, regional banks serve as "a central pillar of balanced development — preventing the outflow of local capital and investing in regional industries and jobs."

The backlash was triggered by an open shareholder letter Align Partners Asset Management sent to the boards of JB Financial Group and BNK Financial Group on July 14. In the letter, Align Partners told both boards that "regional financial holding companies face a structural crisis due to the rapid rise of internet banks and the entrenchment of large commercial bank oligopolies," and said a merger of the two groups was "a realistic solution for the long-term survival of regional finance and the enhancement of shareholder value." Align Partners, an activist fund launched in 2021, is JB Financial Group's second-largest shareholder with a 14.83 percent stake and holds more than 1 percent of BNK Financial Group.

Earlier, on Monday, the BNK Busan Bank labor union and the Busan Bank employee stock ownership association issued a statement opposing any merger feasibility review by the BNK Financial board. BNK Financial said that under the proposed terms, "BNK Financial shareholders would receive only 0.69 new shares for every one share received by JB Financial shareholders — an unfavorable condition relative to capital contribution." The implication is that the merger's benefits would disproportionately favor Align Partners, which holds a stake in JB Financial.

The labor unions of Jeonbuk Bank and Gwangju Bank also issued successive statements saying regional banks "carry a public-good character as pillars of the regional economy, not mere investment targets," and urged the withdrawal of the merger review request.

The Busan Citizens' Solidarity for Decentralization and Balanced Development warned that "at a time when Busan is pursuing the national task of building a 'maritime capital' in preparation for the Arctic shipping route era, if regional finance becomes consumed by short-term profit competition, Busan's growth foundation will inevitably weaken." The group urged the government to "prepare policy support and complementary measures that fully consider the soundness, public character and regional economic contribution of regional financial institutions," and told BNK and other regional financial institutions that "long-term corporate value and community coexistence must be placed above short-term earnings as the foremost management principle."

Align Partners asked both financial groups' boards to establish a special committee composed of independent directors, appoint an external advisory firm to review the merger, announce by Aug. 7 whether they will begin a feasibility review, and disclose the results of that review along with an implementation plan by the third-quarter earnings release date. Opposition from Busan's civic community is expected to intensify.


kaf2002@heraldcorp.com