SEOUL, Jan 10 (AFP) - British banking giant HSBC Holdings PLC has withdrawn from talks to buy Korea First Bank, citing high acquisition costs caused by the rising value of the South Korean currency against the dollar, reports said Monday.
The move left Standard Chartered PLC. as sole candidate to buy a controlling stake in Korea First Bank (KFB) from US equity fund Newbridge Capital, the Korea Economic Daily reported.
Bank officials refused to confirm the report but the newspaper said Standard Chartered plans to take over the entire 100 percent stake in KFB for 3.5 trillion won (3.3 billion dollars) or 17,000 won per share.
KFB is 49 percent owned by US equity fund Newbridge Capital and 51 percent buy the government.
Newbridge was set to announce the sale of its stake to HSBC on December 24 but the announcement was put on hold, sparking speculation that Newbridge had failed to agree a sale price with HSBC.
Newspapers have said HSBC was asked to meet a revised sale price of 18,000 won per share.
Newbridge purchased its KFB stake at 5,000 won per share in 1999 following the Asian financial crisis which devastated the South Korean banking industry.
Newbridge will ask the government to sell its stake to HSBC because the 1999 contract stipulates it must sell if Newbridge make such a request, the source said.
The sale of KFB, the largest ever foreign investment in South Korea's financial industry, will put the buyer in competition with US giant Citigroup in the South Korea banking sector. Citigroup acquired KorAm Bank, the country's sixth largest lender, in April.
Emerging from the 1997-98 Asian financial crisis, troubled financial institutions here were bailed out with state money and then sold on to foreign investors.
01/10/2005 02:27 GMT - AFP