South Korea’s Kookmin Bank would find its expansionist ambitions severely hindered if it missed out on buying rival Korea Exchange Bank, analysts said on Wednesday after Lone Star said it was thinking about terminating the contract to sell KEB.
Negotiations between the US buy-out fund and South Korea’s largest lender have ground to a halt as prosecutors investigate allegations that Lone Star manipulated KEB’s capital adequacy ratio and stock price when it bought the bank three years ago.
Park Hyun-su, a banking specialist at the Samsung Economic Research Institute, said: “If Kookmin fails to take over KEB, I think that would be some kind of shock. They will have some problems in pursuing their goals as a commercial bank, so they will have to look for other ways to enhance their competitiveness.”
KEB represented a good buy for Kookmin, which is strong in retail banking but is looking to KEB to grow its commercial and inter-national businesses.
The FT reported that Lone Star was close to terminating its $7.4bn contract to sell KEB to Kookmin because the prosecutors’ probe has made the bank nearly impossible to sell.
John Grayken, the buy-out fund’s chairman, said: “We are considering internally what to do. We’re talking about terminating.”
Kookmin said it had not been informed of an impending termination.