HSBC Confirms Talks to Acquire Korea Exchange Bank
Source: Xin Hua
The Hongkong and Shanghai Banking Corporation Limited has been in talks on possible purchase of a majority stake in Korea Exchange Bank, South Korea’s sixth largest bank by assets, its mother HSBC Holdings said Monday.
The stocks, if acquired, would be bought from U.S. private equity funds Lone Star, the bank said in an announcement to Hong Kong Stock Exchange, confirming media reports.
Discussions on the possible purchase were ongoing, and if HSBC and Lone Star finally reach an agreement, the transaction would have to be approved by regulatory authorities in South Korea and elsewhere before taking place, according to the announcement.
Established in 1967, the Korea Exchange Bank currently operates in over a dozen countries and regions. Its assets totaled about 91 billion U.S. dollars and it posted a net profit of over a billion U.S. dollars. It was rated A2 by Moody’s.
The bank was established as a government-owned bank specializing in foreign exchange and was privatized in 1989. It suffered losses in the financial crisis in the late ’90s but managed to expand its equity capital by attracting huge investment from Lone Star.
Earlier reports in South Korean media quoted sources as saying that HSBC and Lone Star planned to sign a binding memorandum soon but was still to decide upon the right time for signature, given the recent turmoil from the U.S. subprime mortgage crisis.
With about 10,000 offices in 83 countries and territories around the world, the HSBC group is one of the largest banking and financial services organizations in the world. Its assets totaled 2,150 billion U.S. dollars as of June 30, 2007.
