HSBC said Monday it would hold a “full and open” dialogue with South Korea’s financial regulators in the next few months as the world’s fourth-largest bank seeks permission for its $6.3bn deal to buy a controlling stake in Korea Exchange Bank. The deal is a gamble for HSBC because KEB, South Korea’s sixth-largest bank, is at the centre of a legal battle based on allegations that Lone Star, the US private equity group, bought the bank at an artificially cheap price in 2003, then manipulated the share price of its credit card subsidiary. Lex says HSBC’s offer looks like “a punt on the power of persuasion”. However, while there are some concerns for HSBC in the deal, with Lone Star “desperate to sell”, negotiations would not have been one-sided and the deal makes long-term sense.

This entry was posted by Gwen Robinson on Tuesday, September 4th, 2007 at 5:45 and is filed under Capital markets, M&A, Private equity. Tagged with hsbc, KEB, lone star. Edit this entry.