Korean savings banks, which were hit by a series of bankruptcies back in 2011, have recently been regaining their former health, but this time under Japanese ownership.

The extent of Japanese firms’ interest in the local industry is such as that financial authorities appear to be perplexed by the excessive penetration of Japanese capital into the domestic market.

As a case in point, Apro Service Group, a financial unit mostly known here for its private lender Rush & Cash, officially kicked off a new savings bank chain ― OK Savings Bank and OK2 Savings Bank.

“OK Savings Bank will actively seek out customers and work to satisfy their diversified financial demands,” said Choi Yoon, chairman of the group and president of the two savings banks.

The group, which started its business in Korea in 1999, has repeatedly attempted to expand beyond the payday loans sector to enter the first-tier banking industry.

Last week, local financial authorities finally caved in to its persistent requests and approved its purchase of two fallen savings banks ― Yeju Savings Bank and Yenarae Savings Bank.

Apro is not alone. Other Japanese lenders have also made similar moves to enter the Korean market ― mostly to improve their profit margins since savings banks offer a lower procurement interest rate than most lenders.

J Trust, for instance, has incorporated Mirae Savings Bank, which stood at the center of the savings bank collapses of 2011, and is now seeking to acquire stocks of SC Savings Bank and SC Capital.

SBI, another leading Japanese lending company, purchased Hyundai Swiss Savings Bank and rebranded it as SBI Savings Bank.

Some worry that the rapid influx of Japanese capital threatens to squeeze the struggling Korean firms out of the market, but so far authorities have not acted to stem the tide, saying that the proper regulations are in place.

Last week, the Financial Supervisory Commission reiterated that lenders may only purchase savings banks that face immediate restructuring for financial reasons. It also said that in order to take over “ordinary” savings banks, the lenders must first relinquish their payday loans businesses.

Due to these regulations, with no ban on the nationality of the funds taking over the ailing savings banks, the FSC has yet to reject attempts from Japanese lenders over the past few years.

Experts say there are both pros and cons to the entry of the asset-rich lenders.

“The entry of such wealthy and stable investors obviously offers financial advantages for consumers,” said Lee Jae-yeon, a researcher at the Korea Institute of Finance.

“But the problem is that there is currently close to no regulation and the reckless expansion may cause chaos in the market.”

By Bae Hyun-jung (tellme@heraldcorp.com)