Problems with ownership structure that allowed the largest shareholders to make decisions that decrease firm value are pointed out as one of main causes of the massive failures of savings banks in 2011. In this paper, we examine 30 failed savings banks to explore the determinants of the failures by analyzing the impact of ownership structure and the role of the outside directors. We find that the higher the ownership by the largest shareholders, the lower the likelihood of failure of the savings bank up to a certain level. And at one point, the likelihood of savings bank failure increases as the ownership level of the largest shareholders become concentrated. Thus, we confirm a U-shaped nonlinear relationship between the probability of bank failure and the ownership structure by largest shareholders. We further show that if the largest shareholder participates in direct management as a representative director, the probability of failure is higher than in the case of non-executive directors, while if the existence of outside directors will lower the probability of bank failures. Our results suggest important policy implications that an internal governance system can be strengthened through the shareholder activism of large institutional investors such as pension and trust funds.