By Kang Seung-woo
The nation’s top financial regulator said Monday that a decision will be made on Hana Financial Group’s purchase of the Korea Exchange Bank (KEB) from the Dallas-based buyout fund, Lone Star, this month.
“I will make it faster,” Financial Services Commission (FSC) Chairman Kim Seok-dong said, when asked whether a decision will be made before June. “I want to eliminate uncertainty in the financial market.”
“I will follow the law and regulations,” he added, without specifying whether his decision will mean approval or rejection of the deal.
The FSC has scheduled a meeting for May 18 to discuss the issue, the date after which Hana and Lone Star can call off their deal.
Hana, the nation’s fourth-largest financial services company, agreed to a deal on Nov. 24 last year to purchase the Texas-based buyout fund’s 51.02 percent stake in KEB that it acquired in 2003.
Kim’s remarks came after the FSC repeatedly put off its decision on Lone Star’s eligibility to be the biggest shareholder of KEB from March. The decision is a critical prerequisite for Lone Star to complete its deal with Hana.
In its regular biweekly meeting in March, the FSC partly confirmed that the private equity fund was a financial investor with significant stakes in financial firms rather than industrial ones, and therefore it could legitimately possess a controlling stake in a local bank, paving the way for Hana to take over the bank.
But the FSC postponed granting final eligibility, citing a recent court decision that overturned a not guilty verdict against a Lone Star employee over the latter’s 2003 acquisition of KEB’s card unit. According to local banking laws, if Lone Star is to be eligible, the company must be free from legal violations for five years.
The regulator is likely to put the issue on the table on May 18 during a meeting of its decision-making council because the contract can be broken by either side after May 24, which marks the end of a six-month period from the signing day.
Meanwhile, Kim said that the financial regulator will seek ways to include the Korea Deposit Insurance Corp. (KDIC) in the Financial Supervisory Service’s (FSS) inspection of financial institutions.
The FSS, the executive arm of the FSC, has been under fire for its poor oversight of troubled savings banks and corruption committed by its officials.
“Due to a lack of workforce at the FSS, I plan to take advantage of the KDIC because the deposit insurance agency is directly involved in guaranteeing the payment of up to 50 million won for each savings bank client,” Kim said.