HSBC Holdings and the labour union of Korea Exchange Bank (KEB) have entered into an agreement, according to which the UK bank has pledged to keep KEB listed on the Korean Exchange if the deal goes through.
HSBC’s latest agreement with the labour union is an attempt to assuage concerns that it seeks to take the bank private; and could also be seen as an attempt to persuade regulators to approve the deal by providing some clarity on its post-acquisition plans for KEB.
The UK bank has pledged not to change the name of the bank and its listing status on the Korean stock market. It also said that current levels of employment at KEB will be maintained and that there are no plans for staff reductions at the bank.
The two parties have agreed that HSBC will maintain a board in which a majority of directors will be Korean and will be external directors.
“HSBC and the new directors will respect Korea’s financial market (including Korean customers and regulators) and KEB employees in respect of future management of the Bank,” the agreement noted.
US private equity firm Lone Star decided to sell its stake to HSBC in August 2007 for $6.3 billion (€4 billion), but the deal has consistently run into regulatory hurdles as a result of allegations of impropriety attached to the firm’s 2003 $1.2 billion acquisition of its stake in KEB. The last day for the completion of the deal is July 31, a three-month extension on the previous deadline.
In June this year, the Seoul High Court cleared Lone Star of stock price manipulation of KEB’s former credit card unit. Prosecutors, however, dissatisfied with the ruling of the Seoul High Court, have lodged an appeal with the country’s Supreme Court.
Earlier this month, Richard Wacker, KEB chief, said that Lone Star could look to dilute its stake in the bank through block sales of shares if the deal did not get the necessary approvals soon.