HSBC Holdings agreed on Monday to purchase a 51 percent stake in Korea Exchange Bank (KEB) from US private-equity firm Lone Star for $6.3 billion, in a deal that could substantially increase its presence in Korea.
If the deal, struck on Monday, secures legal and regulatory approval, Lone Star will more than quadruple its initial investment in KEB, according to Reuters.
"This deal would provide HSBC with a significant presence in Asia's third-largest economy," notes Stephen Green, chairman, HSBC. Seoul-based KEB has more than 350 branches and operates in 18 countries, making it the nation's sixth-largest lender.
However, unresolved legal issues threaten to obstruct HSBC's acquisition. Prosecutors say a former government official colluded with a Lone Star lawyer and KEB's chief executive to inflate KEB's losses and allow Lone Star to buy it at a reduced price.
The head of the South Korean unit of Lone Star, Paul Yoo, is on trial on suspicion for attempted lowering of the share price of the former credit card unit of KEB.
The protracted legal wrangling led to the investment fund cancelling a $7.3 billion agreement to sell KEB to local bank Kookmin last November.