By Kim Jae-kyoung
Staff Reporter
Hana Financial Group, the nation's fourth largest financial holding company, withdrew its attempt to take over Commonwealth Business Bank (CBB), a U.S. bank owned by a Korean-American, the group said Sunday.
A Hana official said that Hana decided to cancel the contract signed in October to purchase a 37.5 percent stake in the Los Angeles-based CBB for $35 million.
The cancellation came as the U.S. Federal Reserve Board (FRB) raised question over Hana's legitimacy as the largest shareholder for CBB as Temasek Holdings, the major shareholder of Hana, is considered non-financial capital. Temasek is an investment company owned by the government of Singapore.
In addition, the dramatic change in the financial markets over the past year has led to the takeover price resurfacing as another obstacle.
Hana Financial received approval on the takeover from the Financial Services Commission in December but hasn't received permission from the FRB.
``Although we pulled back from our bid to take over CBB, we will continue to push for a plan to make inroads into the U.S. market,'' a Hana official said.
Established in March 2005, CBB is a commercial bank specializing in lending to small- and medium-sized enterprises, with total assets of $261.9 million and equity capital of $41 million as of September.
In the meantime, Hana Financial has fallen biggest victim to the ongoing financial turmoil, suffering a loss in the third quarter for the first time in eight years. It posted a net loss of 73.3 billion won between July and September.