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South Korea starts review of HSBC bid for Korea Exchange

South Korea’s financial watchdog said yesterday it has started a long-delayed review of HSBC’s bid to buy Korea Exchange Bank (KEB), after the global giant submitted updated documents on the deal.

Financial Services Commission chief Jun Kwang-woo said the regulatory review began on Aug. 18 but declined to say whether the watchdog would approve the US$6 billion deal to buy a 51 percent stake in KEB from Lone Star.

“It is difficult to predict its outcome and direction,” he said.

HSBC agreed last September to buy Lone Star’s stake in KEB, the country’s fifth largest lender.

But the watchdog withheld approval, citing legal disputes over the US buyout fund’s 2003 purchase of the Korean bank.

The commission resumed its review after HSBC submitted updated documents on the deal.

Prosecutors investigated allegations that former government officials and a former president of KEB colluded to “artificially” understate the bank’s financial health to help Lone Star purchase it at a below-market price.

A verdict in the case, in which Lone Star is not charged, is expected by the end of next month at the earliest.
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