Hana to buy $50m stake in Merrill

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Hana Bank plans to buy $50m worth of shares in Merrill Lynch from Singapore’s Temasek, making it the latest South Korean investor to take advantage of market turmoil and increase its exposure to the US banking sector.

A Hana Bank official told the Financial Times that a deal was being considered by the bank’s directors and could happen in the next couple of weeks.

Hana is expected to buy 1m shares at $50 a share from Temasek, Singapore’s state-owned investment company. This represents a 3.2 per cent discount to Merrill’s closing share price of $51.64 on Friday. It will involve only a small portion of Temasek’s 9.4 per cent stake in Merrill.

The purchase would make Hana the second Korean investor in the US banking group in as many months, following the $2bn stake bought by the Korea Investment Corporation, the sovereign fund, as part of Merrill’s capital-raising plan.

Temasek is the largest shareholder of Hana Financial, the bank’s holding company, with a 9.6 per cent stake.

Separately, Merrill on Monday said it had received a licence to open a bank branch in Korea, which will allow it to complement its existing investment banking business by offering the full range of its banking products in Korea.

Merrill already holds foreign exchange and over-the-counter derivatives trading licences. However, the branch licence will allow it to operate in foreign exchange spot markets, derivatives, lending and loan trading, structured deposits, bonds and futures.

Landesbank Baden-Wurttemberg of Germany has also received permission to set up a branch, meaning that 38 foreign banks now have an official branch in Seoul.

The Korean government has been trying to encourage the development of the financial industry as a future engine of growth in the manufacturing-dependent society.

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