ID :
20212
Fri, 09/19/2008 - 20:10
Auther :
Shortlink :
http://m.oananews.org//node/20212
The shortlink copeid
HSBC terminates deal to buy KEB
SEOUL, Sept. 19 (Yonhap) -- HSBC Holdings Plc said Friday it has decided to terminate a deal to buy a 51.02 percent stake in Korea Exchange Bank (KEB), citing falling asset values amid a global credit crunch.
Last September, U.K.-based HSBC agreed to buy South Korea's No. 5 lender from U.S. buyout fund Lone Star Funds for US$6.3 billion, but the deal has been deadlocked as the financial watchdog here is withholding its approval, citing legal disputes over Lone Star's 2003 purchase of KEB.
"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.
A KEB official declined to comment on HSBC's decision. A public relations agency in South Korea representing Lone Star was not available for comment.
The termination came as South Korea's financial regulator, the Financial Services Commission (FSC), 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 and Lone Star had been discussing the next step for the deal as a second deadline for closing the agreement expired on July 31.
Market watchers said HSBC's decision to terminate the agreement may come as it is not clear when the watchdog will give its regulatory approval and global financial market jitters have deepened.
South Korea's prosecutors are looking into allegations that former government officials and a former president of KEB colluded to "artificially" understate KEB's financial health in a bid to help Lone Star purchase the lender at a below-market price. A verdict on the case is expected by the end of September at the earliest.
"HSBC has expressed its intent to give up the KEB takeover... It seemed that amid global financial market turmoil, renegotiations for takeover prices between the two parties might not go smoothly," a ranking official at the FSC said.
Analysts said HSBC's decision to pull out of the KEB takeover will reignite competition to acquire KEB in the local banking sector. South Korea's top lender Kookmin Bank has expressed its interest in buying KEB, even after Lone Star scrapped a deal to sell its whole stake to Kookmin Bank in November 2006 amid the legal limbo related to its purchase of KEB in 2003.
Last September, U.K.-based HSBC agreed to buy South Korea's No. 5 lender from U.S. buyout fund Lone Star Funds for US$6.3 billion, but the deal has been deadlocked as the financial watchdog here is withholding its approval, citing legal disputes over Lone Star's 2003 purchase of KEB.
"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.
A KEB official declined to comment on HSBC's decision. A public relations agency in South Korea representing Lone Star was not available for comment.
The termination came as South Korea's financial regulator, the Financial Services Commission (FSC), 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 and Lone Star had been discussing the next step for the deal as a second deadline for closing the agreement expired on July 31.
Market watchers said HSBC's decision to terminate the agreement may come as it is not clear when the watchdog will give its regulatory approval and global financial market jitters have deepened.
South Korea's prosecutors are looking into allegations that former government officials and a former president of KEB colluded to "artificially" understate KEB's financial health in a bid to help Lone Star purchase the lender at a below-market price. A verdict on the case is expected by the end of September at the earliest.
"HSBC has expressed its intent to give up the KEB takeover... It seemed that amid global financial market turmoil, renegotiations for takeover prices between the two parties might not go smoothly," a ranking official at the FSC said.
Analysts said HSBC's decision to pull out of the KEB takeover will reignite competition to acquire KEB in the local banking sector. South Korea's top lender Kookmin Bank has expressed its interest in buying KEB, even after Lone Star scrapped a deal to sell its whole stake to Kookmin Bank in November 2006 amid the legal limbo related to its purchase of KEB in 2003.
