RETAIL BANKING | Tony Chua, Korea

Hana Financial to push for KEB takeover after ruling

Hana awaits South Korea financial regulator’s next move, which may include orderingLone Star to sell most of its 51 percent stake.

Hana Financial Group Inc. will push to complete its purchase of Korea Exchange Bank from Lone Star Funds after a Seoul court ruled on a five-year legal dispute that stalled the U.S. buyout fund’s efforts to sell the lender.

“We will do our utmost to complete the Korea Exchange Bank takeover to best serve our shareholders,” Hana President Kim Jong Yeol said by telephone Thursday after the Seoul High Court found Lone Star guilty of stock-price manipulation. The company is now waiting for guidance from the financial regulator, which said it may order the Dallas-based fund to sell most of its 51 percent stake.

Wrangling with courts and regulators pushed back Hana’s plan to take over the bank by May and derailed two earlier attempts by Lone Star to sell its stake. A public backlash over the profits the fund has made on its eight-year investment may deter foreign takeovers in South Korea, impeding government plans to sell state assets such as Woori Finance Holdings Co.

“It has taken too long for the resolution of the KEB-Lone Star case,” Hank Morris, North Asia adviser at Triple A Partners Ltd., said by e-mail before the verdict. The delay “will have had a negative effect upon the plans of global investors in regard to direct investment into Korea.”

Hana Financial rose 2.5 percent to 36,400 won at the 3 p.m. close of Seoul trading and climbed as high as 38,400 won. Korea Exchange shares advanced 6.5 percent to 7,750 won after rising as much as 11 percent. The benchmark Kospi index advanced 2.9 percent.

Paul Yoo, the former head of Lone Star’s South Korean unit, was sentenced yesterday to three years in prison by Judge Cho Kyung Ran. Lone Star was fined 25 billion won ($21 million) by the court. Korea Exchange Bank was found not guilty, Cho said after presiding over a retrial ordered by the Supreme Court this year following their acquittal in June 2008.

View the full story in Business Week.

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