Top Financial Regulator Meets HSBC Executives
By Na Jeong-ju
Staff Reporter
Financial Supervisory Commission (FSC) Chairman Kim Yong-duk participated in a financial forum in Seoul Friday, along with HSBC Korea Chairman Shin Myung-ho and HSBC Korea CEO Simon Cooper.
They sat on the same table with other participants, but hardly talked to each other.
``We talked only about a few personal affairs. We didn’t talk about Korea Exchange Bank (KEB),’’ Shin told reporters at the end of the forum.
The meeting came after Kim made it clear that he opposes the sale of KEB until legal problems about Lone Star’s acquisition of KEB in 2003 are cleared. On Sept. 3, HSBC said it signed a contract to take over KEB with Lone Star, the majority shareholder of KEB.
``There are still many things to be done before we make any decision on whether to approve the sale of KEB,’’ Kim said at the forum.
HSBC has shown eagerness to become the new owner of KEB, but it is still doubtful whether it can complete the deal, given negative public sentiment toward Lone Star and an unfavorable reaction from Korean regulators. HSBC said it plans to seek a regulatory approval for the acquisition of KEB after completing due diligence on KEB.
Early this week, the FSC said it launched an inspection into HSBC’s Seoul branch to check whether it violated banking rules immediately after the bank announced a bid to take over KEB. The FSC has downplayed the meaning of the probe, but many believe the regulator, annoyed by HSBC's move, is trying to put pressure on HSBC.
Depending on the outcome of the inspection, HSBC can be disqualified from participating in an acquisition deal in South Korea if it has violated the Banking Law.
``I understand what the FSC wants,’’ HSBC Korea Chairman Shin said, without giving further details.
If regulators don't approve the sale of KEB, HSBC should scrap the contract it signed with Lone Star. Given the FSC sticking to its original stance about the KEB sale and the negative public sentiment about it, it will be difficult for HSBC to get a nod from the FSC to complete the deal, according to analysts.
The FSC has pledged not to allow the sale of KEB until an ongoing court battle over Lone Star's alleged violation of laws comes to an end, no matter who will buy the bank. The Seoul Central District Court is currently reviewing the case, with many forecasting the final verdict won't come before the end of 2008.