The deal might depend on the outcome of a court case related to Lone Star’s acquisition of the stake in 2003, which last year prevented the private equity firm from selling the stake to Kookmin, South Korea’s largest bank.
The cancelled deal had a value of $7.3bn. A second bidder, Singapore’s DBS, withdrew its offer in June hinting at legal uncertainties.
A Seoul court is looking into whether Lone Star conspired with local officials to drive down the price of KEB when the private equity firm bought it four years ago.
The world’s third largest bank has sought to establish a presence in South Korea for some time. While its competitors have successfully completed local deals, HSBC presently has only 11 branches in the country. Citigroup and Standard Chartered have both tapped into Asia’s fourth largest economy thanks to the acquisition of local players – which the London-based bank also tried to buy. South Korea is now Standard Chartered’s second biggest market.
Acquisitions are seen as the best option to enter South Korea’s lucrative financial services market because of the government’s reluctance to allow new entrants in the crowded banking sector.
Some analysts believe that HSBC will face an arduous process to get the purchase approved by authorities while Lone Star’s legal issues still have to be solved, and that authorities will prefer a local bidder. Should the deal be approved, it would mark a third major Korean bank bought by foreign lenders.
Others believe that the deal has high chances of succeeding because the South Korean regulators might lack justification in delaying the approval process.
Kookmin Bank, Hana Financial and the National Agricultural Co-operative Federation are still believed to be interested in KEB.
HSBC would maintain the KEB brand and current listing on the Korea Stock Exchange.
French brokering merger
French banks Société Générale and Calyon have agreed to merge their brokerage activities carried out by their respective units, Fimat and Calyon Financial. The new entity, to be called Newedge, will focus its activities in the derivatives market and is expected to start operations in early 2008. As of December last year, the combined businesses handled over 1.3 billion contracts with sales of more than €1bn ($1.38bn).
Borse Dubai has launched an offer for the Nordic stock exchange operator OMX, which had agreed an offer from Nasdaq. At SKr230 ($32.81) a share, the offer of the government-owned Middle Eastern exchange represents a premium of 13.7% to Nasdaq’s offer of SKr202.3 a share. Nasdaq has decided to sell its 31% stake in the London Stock Exchange to step up its offer for OMX.
Iceland’s biggest bank, Kaupthing Bank, has announced the purchase of Dutch bank NIBC for €3bn. The combined entity will have total assets of €86bn. Prior to the announcement, NIBC declared a subprime-related loss of €137m. The Dutch lender also planned to float earlier this year. Both banks focus on lending and providing advisory services to small and medium-sized businesses.
New York-based JP Morgan has announced it will inject more capital into its Thai banking unit to expand operations in the country, the second largest economy in south-east Asia. The bank did not disclose the amount of capital, which is expected to be invested in the Thai unit by the end of the third quarter, but revealed that private banking and asset management are businesses that have room to grow.
Qatar’s Doha Bank has opened a China office as it looks for opportunities to team up with a local bank and tap into the country’s economic growth. Doha Bank is Qatar’s sixth largest lender by market value. It plans to make the office a fully operational branch in two years.
HSBC has become the first foreign lender to launch a rural bank in China, which plans to begin operations by the end of this year. The venture is part of the bank’s rural banking programme, which fits in with Beijing’s plan of modernising the countryside and narrowing the gap between the poor inland farmers and wealthier coastal residents.
Standard’s Islamic route
Emerging markets specialist Standard Chartered has announced plans to expand its Islamic finance products offering to Africa and India. The bank is present with current accounts and other sharia-compliant products in five markets and has recently launched credit cards in the United Arab Emirates, Pakistan and Bangladesh. In the first six months of the year, its wholesale bank was lead arranger in four of the five local currency sukuk (Islamic) bond issues in Pakistan.
The Philippines’s second largest bank, Banco de Oro, has bought the local operations of American Express for an undisclosed amount.
Australian Macquarie Bank has adapted its structure to growing non-banking business through a proposed non-operating holding company structure that would free the bank’s portfolio of non-banking operations from banking regulatory requirements.
The bank said that the move was needed because its diverse international business was growing faster than its Australian banking business. International income grew 70% last year to A$3.46bn ($2.84bn).
The National Bank of Kuwait (NBK) signed an agreement in July to acquire a 40% stake in the small Istanbul-based Turkish Bank from the Turkish Cypriot Ozyol family for $160m, as Turkey continues to benefit from a surge in Arab investment. NBK has also acquired Egypt’s AlWatany Bank in a deal valued at about $1bn. NBK fought off competition from Commercial Bank of Kuwait and Greece’s EFG Eurobank. Analysts believe that the high price paid is justified by the fact that the deal represents one of the last chances to enter the local market.
Sumitomo Mitsui Financial Group, Japan’s third largest bank, has said it is in talks with state-owned Exim Bank of Vietnam for a possible 15% investment in a bid to expand its presence in the region.
US investment bank Lehman Brothers has agreed to buy the institutional equity business of Indian brokerage Brics Securities for an undisclosed sum as the bank seeks to expand its footprint in the country.
Shanghai Rural Commercial Bank has plans to issue its first credit card in the next few months, in an effort to increase its personal finance services, according to Reuters. The Chinese bank is part of the Australia and New Zealand Banking Group (ANZ). The card would be based on international standards and unlike other cards issued by Chinese banks and their foreign partners it would not carry the ANZ logo.
Top 1000 corrections
Crédit Agricole has informed The Banker that the Tier 1 capital figure supplied and used in good faith in the July 2007 Top 1000 had not had goodwill deducted as is required in the calculation of Tier 1 capital. Its Tier 1 capital figure should have been $53.124bn which would have placed it at number eight in the listing.
Following a keying error on reporting currency, Ahli United Bank of Bahrain dollar figures were overstated by a factor of 2.66. Tier 1 capital is $1.212bn, assets $20.799bn and pre-tax profit $261m. These figures meant that Ahli United should have been placed at 365 in the world listing and third in Bahrain. We apologise for this error.
Top 1000 clarification
Both Chang Hwa Commercial Bank and Taishin International Bank from Taiwan do not appear in the Top 1000 as their holding company, Taishin Financial Holding Company, submitted consolidated figures for the group this year. It should be stressed that both banks are still operating under their own names.
It has always been The Banker’s policy to use consolidated group figures when possible which means that subsidiary banks of the group are not included in the listing to avoid double counting of capital, assets and profit.
