Hana Bank is likely beat Lone Star Funds today to become the preferred bidder for SeoulBank, clearing a hurdle in its effort to become South Korea's third-largest lender, investors said.
The Public Fund Oversight Committee, whose sub-committee recommended Hana's bid over the Texas-based fund, is set to make a final selection Monday on who should buy SeoulBank. Hana is favored to win, Yonhap News reported, citing an unidentified official at the Ministry of Finance and Economy.
SeoulBank's sale could help the government, which spent about US$130 billion rescuing the financial industry. It plans to nurture South Korean banks back to health by reducing the number of competing lenders. For Hana, buying SeoulBank helps it compete against larger rivals such as Kookmin Bank.
"Hana's always been favored to win because the government is scared that [Lone Star] just wants to buy SeoulBank for a short period and sell it at a profit," said Jang Dong-hun, who manages 600 billion won (US$505 million) at SK Investment Trust Management Co, including Hana shares.
"It's a good deal for Hana because SeoulBank's retail business would nicely complement its main business of lending to corporate clients."
The eight-member committee ``will probably find it difficult to find enough evidence to overturn'' its sub-committee's choice earlier this month of Hana as the preferred bidder, Yonhap cited the Finance Ministry official as saying.
Byeon Yang-ho, the ministry's director-general for financial policy, declined to comment on today's Yonhap report. "We'll all have to wait until the committee's decision tomorrow," he said.
Lone Star last week raised its offer for SeoulBank by 23 percent to 1.05 trillion won, sparking complaints by Hana. The lender eventually raised its own bid this week. Hana is offering to buy SeoulBank through stock and future dividends, Korea Economic Daily reported on Wednesday.
Lone Star is also pledging to forego tax breaks available to SeoulBank, people familiar with the transaction said. Lone Star made the proposal through Goldman Sachs Group Inc, which is advising the government.
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