HSBC gets antitrust approval for Korea Exchange Bank bid

05 Mar 2008

1

Mumbai: British banking giant HSBC Holdings Plc has received approval from Korean antitrust authorities, the Fair Trade Commission, for its $6.45 billion takeover bid for Korea Exchange Bank.

``The Fair Trade Commission analysed the merger effects of HSBC and Korea Exchange Bank's products in eight markets, and concluded that there aren't any breaches of antitrust regulations,'' the agency said in an e-mailed statement.

HSBC, Europe's largest bank by market cap, however, said final approval hinges on the resolution of legal disputes.

HSBC has to get all issues over US private equity firm Lone Star's investment in KEB cleared before it can hope to get final clearance from Korea's Financial Services Commission.

A deal now hinges on Lone Star Funds, the majority owner of Korea Exchange Bank, and South Korean prosecutors.

Lone Star South Korea head Paul Yoo, meanwhile, is serving a jail term for stock price manipulation and the Financial Supervisory Service has withheld final approval of the takeover pending court appeals.

Lone Star and Korea Exchange were also found guilty of stock manipulations, and each were fined 25 billion won ($26 million). All parties plan to appeal the rulings.

Lone Star's 2003 takeover of KEB, South Korea's fifth-largest by market value, is also under cloud as prosecutors allege it was engineered at an artificially low price through a political conspiracy.
 
Lone Star signed an agreement to sell its 51 per cent stake in KEB to HSBC Holdings in September last year.

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