HSBC Holdings Plc is eager to enter in South Korean banking business and needs a bigger network to compete with its archrivals Citigroup and Standard Chartered. After DBS’s reluctance to purchase shares in the Korea Exchange Bank from the Lone Star, HSBC Holdings is eying at majority stakes and ready to pay $4.5bn for 51% shares.
HSBC is already doing banking business in S. Korea and seems to have a high possibility to win government approval for the deal. Meanwhile, Singapore-based DBS, which prior approached the Lone Star for the deal, but failed due to prolonged legal dispute between majority shareholder Lone Star and South Korean authorities.
Although, HSBC is a favorite suitor for the Korea Exchange Bank, yet the path isn’t easy for it. Widening losses is a major hindrance for the deal and also an ongoing legal battle can mar HSBC’s chance to enter in S Korean market. It’s not the end of the worries, there is also credit control issue as Korea has already sold two of its major banks to foreign players and if it sell its third one too, it will automatically shift credit control power from the Korean authority to foreign bankers, which at least regulator won’t like very much.
Via: Yahoo!
