The Korean government has reportedly said it will block US buyout firm Lone Star’s attempt to sell its stake in Korea Exchange Bank to HSBC, until the current legal proceedings against the firm are completed.
Kim Dae-pyung, deputy governor of the Financial Supervisory Service, Korea’s main financial watchdog, said the government would not approve any sale of the KEB stake until the courts had ruled on the legality of Lone Star’s original deal, according to media reports.
At a weekly briefing, Kim said the watchdog had not been informed about any potential deal, and stressed that no sale would be approved until a ruling had been made on whether Lone Star was guilty of price manipulation when it bought the bank in 2003. “HSBC cannot be an exception,” he reportedly said.
Lone Star had seemed to be on the verge of agreeing a deal with HSBC to sell its 51 percent stake in KEB for about $5 billion, as the UK-based bank looks to increase its presence in the potentially lucrative Korean market.
However, the raid on the buyout firm’s offices last week – where tax officials confiscated 11 boxes of documents relating to recent deals – followed by yesterday’s pronouncement has put the sale in doubt.
Lone Star has already been forced to cancel a lucrative $7.3 billion sale to Kookmin Bank because of its ongoing dispute with the Korean authorities.