HSBC gives up buying Korea Exchange Bank
19/9/2008 16:46
HSBC Holdings Plc announced today its decision to pull out of the Korea
Exchange Bank (KEB) takeover, citing falling asset values amid a global
financial turmoil.
"Taking into account all relevant factors including
current asset values in world financial markets, HSBC Asia exercised its right
to terminate the acquisition agreement with immediate effect, " the bank said in
a statement.
Last September, HSBC agreed to buy 51.02 percent stake in KEB,
South Korea's No.5 lender, from Lone Star Funds for 6.3 billion U. S.
dollars.
However, the deal had remained deadlocked as South Korea's financial
regulator, withheld its approval, citing legal disputes over Lone Star's 2003
purchase of KEB.
Currently, South Korea's prosecutors are investigating
whether former government officials and a former president of KEB had colluded
to "artificially" understate KEB's financial health to help Lone Star purchase
the lender at a below-market price.
The termination came shortly after the
Financial Services Commission's (FSC) announcement that said it may approve the
deal "at an appropriate time" if serious problems are not found in additional
documents to be submitted by HSBC.
"HSBC expressed its intent to give up the
KEB deal as it could not agree with Lone Star on deal terms including the
takeover price in renegotiations," Kim Kwang-soo, director-general at the
financial services bureau of the FSC, told reporters.
"It is regrettable that
HSBC scrapped the deal while the FSC has been reviewing the case." he
added.
The nation's Yonhap news agency said HSBC's decision to abandon KEB
will reignite domestic competition to acquire KEB.
Kookmin Bank, South
Korea's No.1 lender, has showed interest in taking over KEB, even after Lone
Star scrapped a deal to sell its whole stake to Kookmin Bank in November
2006.
Hana Financial Group, the nation's third-largest financial services
company, also expressed interest in buying KEB.
Xinhua
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