South Korea regulator urged to scrap Hana-KEB deal

Supreme Court’s recent ruling and labor union protests threaten to veto the merger.

The nation’s financial authority has been under mounting pressure to reject the takeover deal between Hana Financial Group and U.S. Lone Star Funds on the latter’s planned sale of Korea Exchange Bank.

Amid several unfavorable factors for Lone Star, including the Supreme Court’s recent ruling, the possibility that the Financial Services Commission will scrap its alleged decision to endorse the deal is emerging.

Hana Financial applied for the deal on Dec. 13 to the FSC, and the regulator had been expected to finalize the decision whether to approve Hana’s scheduled acquisition of KEB before April.

But last Thursday, the Supreme Court overturned a lower court decision that found Yoo Hoe-won, former head of the now-defunct Lone Star Korea, not guilty in the case of the Korean unit of the U.S. fund manipulating the stock price of the now-defunct KEB Credit Card.

As the case has been sent back to the Seoul High Court for retrial, uneasy public sentiment about the U.S. buyout fund is likely to get worse.

Furthermore, the union of KEB has strengthened its call for the financial authority to veto the deal. Thousands of the bank’s staffers held a sit-in protest at the KEB headquarters in downtown Seoul over the weekend.

View the full story in Korea Herald.