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HSBC abandons $6bn offer for KEB

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by Kay Mitchell

HSBC has confirmed it is to withdraw its $6 billion (£3.3 billion) bid to purchase a 51% stake in Korea Exchange Bank (KEB).

The majority stake is owned by US private equity firm Lone Star Funds. The acquisition was agreed by HSBC over a year ago but regulators in South Korea withheld approval, pending investigation into Lone Star’s investment practices in the country.

If the deal had gone ahead, it would have represented the biggest foreign acquisition in South Korea. Back in 2005, HSBC lost out to Standard Chartered Bank in its quest to buy Korea First Bank.

There have been reports that HSBC may use the money to buy one of the western banks hit by the credit crunch.

Commenting on the withdrawal, HSBC Asia chief executive Sandy Flockhart said, in view of global market developments this week, we do not believe it would be in the best interests of shareholders to continue to pursue this acquisition.

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News posted: September 19, 2008

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