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27 May 2024

HSBC files for approval to buy S.Korea's KEB

By Agencies


HSBC Holdings Plc has applied for regulatory approval to close its $6.3 billion purchase of a stake in Korea Exchange Bank (KEB), South Korea's top financial watchdog said on Thursday.

London-based HSBC Holdings Plc had said in September that it agreed to buy a 51.02 percent stake in KEB from U.S. private equity firm Lone Star, conditional on receiving the necessary approvals by April 30, 2008.

The application, filed on Dec. 17, would be the main hurdle for the London-based bank, as local regulators have said they would not give the go-ahead to the sale until all legal problems over Lone Star's 2003 purchase of KEB were resolved.

"Taking into account court trials under way, we plan to make it clear that the review process can be delayed a little bit," Hong Young-man, a spokesman for the Financial Supervisory Commission, said in a briefing broadcast via the Internet.

The regulator's announcement comes a day after the landslide presidential election victory by pro-business candidate Lee Myung-bak, who had promised to make the country more attractive to investors.

Industry watchers expect the president-elect to speed up the protracted sale of KEB, which could help spur a new wave of consolidation in the sector and restore foreign investor confidence.

The legal tussle over Lone Star's acquisition of KEB in 2003 had led the Dallas-based fund to scrap a $7.3 billion deal with top local bank Kookmin last year.

HSBC is also awaiting the South Korean antitrust agency's review on whether its purchase of KEB would discourage competition in the domestic banking sector.

Shares in KEB rose 1.03 per cent to 14,750 won by 0540 GMT, outperforming the wider market's 0.57 per cent fall. (Reuters)