HSBC's bid to buy Korea Exchange Bank, already under regulatory pressure, could face a challenge from Kookmin Bank (NYSE:KB), South Korea's biggest lender.
Lone Star Funds last year cancelled a $7.3bn sale agreement that would have given Kookmin 71 per cent of KEB amid probes of Lone Star's original 2003 takeover of KEB.
Kim Ki-hong, vice-president at Kookmin, said his bank could still have a chance to bid for KEB if HSBC fails to win regulatory approval for its conditional offer.
"I don't think we've lost the game, it's rather on hold," Mr Kim told reporters. "We still have a chance and are thoroughly preparing for the possibility."
Mr Kim hinted that Kookmin may offer a higher price for KEB if it was given another chance.
"We're not so bitter about the broken deal because the public now understands better why Kookmin should acquire KEB," Mr Kim said. "In hindsight, it is proven that our deal with Lone Star was quite good in terms of price and other conditions."
Financial authorities have repeatedly hinted that they would prefer for local companies to become the new owners of KEB and Woori Bank amid public concerns about growing foreign influence in the financial sector.
Kookmin was previously to pay Won15,200 per share. Under the deal signed with Lone Star last week for 51 per cent of KEB, HSBC is to pay $6.3bn, or Won18,045 per share. HSBC started due diligence this week.
The Financial Supervisory Commission has said it would not consider any application to buy KEB while court cases relating to Lone Star's 2003 purchase of the bank were ongoing.
Lone Star has been cleared of wrongdoing but former government and bank officials remain under investigation.
The probes were launched after a public outcry over the big tax-free profit that the fund group would make over the sale of its KEB stake.
Kim Yong-duk, FSC governor, said this week that the Financial Supervisory Service would evaluate the legitimacy and financial strength of KEB's potential buyer as well as the efficiency of the local financial industry and the bidder's contribution to the domestic financial sector.
By FT.com
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Interesting story.
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