By Kim Jae-won
Hana Financial’s takeover of the Korea Exchange Bank (KEB) has been delayed but not for long with a top regulator already promising to make a decision this month.
The Financial Services Commission (FSC) did not discuss Lone Star Funds’ eligibility as a KEB major shareholder at a meeting Wednesday afternoon.
A spokesman confirmed that a decision will be made at its next meeting to be held in two weeks or during an emergency meeting.
“We did not put the Lone Star case on the table this time,” an FSC spokesman said. “We set up a plan to end the Lone Star case in April. We will follow it.”
FSC Chairman Kim Seok-dong told reporters last week that action would be taken on the Texan buyout fund case within this month.
Lone Star’s eligibility as the major shareholder of KEB has been a hot issue as the Supreme Court overturned a high court decision on March 10, which had cleared the fund’s Korean unit chief Paul Yoo of stock manipulation allegation. Yoo was suspected of being involved in manipulating stock prices of KEB’s credit card subsidiary in 2003 to enable Lone Star to buy it cheaply.
If the high court accepts the ruling, Lone Star could lose its major shareholder status under Korean Banking Law. The Texan fund would be ordered to sell a 41-percent out of its 51-percent KEB stake as required under the law.
The case is under review and it will take at least six months before a conclusion is made, although the lower court more often than usual follows the Supreme Court’s decision, legal experts say.
The FSC’s decision will be a watershed for three entities — Lone Star, KEB and Hana Financial Group.
Hana Financial signed a 4.7 trillion won deal with the Dallas-based private equity company to buy its controlling 51-percent stake in November.
If the FSC gives the green light to Lone Star, it can exit the nation taking home 4.7 trillion won for the 51 percent stake it bought from German-based lender Commerzbank for 1.3 trillion won in September 2003.
Lone Star already recouped all of its initial investment through notorious high dividends, so the entire deal price will result in a net profit except for about 10 percent in possible taxes.
KEB employees demand the FSC wait until the court rules on the Lone Star case. They argue that Lone Star is not eligible to be a major shareholder of the sixth-largest Korean lender.
Hana Financial is facing a critical moment. If the deal is completed, Hana will become the third largest banking group.