KEB Sale Unlikely Until Court Ruling
By Na Jeong-ju
Staff Reporter
U.S. investment firm Lone Star is unlikely to get approval for the sale of its controlling stake in Korea Exchange Bank (KEB) until a Seoul court rules on the legality of its purchase of the country's fifth largest lender in 2003.
The Financial Supervisory Service (FSS) said Sunday it will conduct a ``thorough screening'' on the qualification of a new owner of KEB, even if Lone Star signs a contract to sell the bank.
``With Lone Star awaiting a court ruling over its purchase of KEB in 2003, we can't let it hand over the bank's control without due inspection,'' an FSS official said. ``Who will take over KEB is a very important issue. If Lone Star finds a strategic investor who will take over the bank, we will thoroughly check its qualification.''
As to mounting calls from civic groups and some lawmakers that the regulator should ban Lone Star from selling its stake in KEB, the FSS said it depends on a court ruling, expected to come out late this year.
The comments came after Lone Star said on Friday it sold a 13.6 percent stake in KEB for 1.19 trillion won ($1.28 billion) through a block sale and that it is actively looking for an investor who can buy the remaining 51.02 percent stake.
``Lone Star still owns a majority stake in KEB and will continue to hold this investment for sale to a strategic investor,'' Lone Star Chairman John Grayken said in a statement.
The fund also disposed of its stakes in Kukdong Engineering & Construction and StarLease last week, raising speculation that it is moving to leave the country in the face of negative public sentiment.
Just a few weeks ago, Grayken told the Korean media that he would maintain business in Korea for more than a decade.
The National Tax Service (NTS) said Sunday it will begin an audit soon to check whether Lone Star avoided any taxes from the sale of its assets in Korea.
``It is very normal for the NTS to audit companies if they are engaged in the transfer of ownership,'' an NTS official said.
The Seoul Central District Court is reviewing Lone Star's alleged violation of the Securities Law in its purchase of KEB in 2003. Korean prosecutors earlier called its KEB purchase ``illegal,'' and state auditors also concluded it was illegal for South Korean regulators to approve the deal.