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April 24, 2008
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This message, which President Lee Myung-bak pitched to global investors on his first trip to the United States last week, was echoed yesterday by the head of the nation’s top financial watchdog. In a shift from the previous administration’s position, Financial Services Commission Chairman Jun Kwang-woo said the delayed sale of Korea’s fifth largest bank by Lone Star Funds will be facilitated in a way that is “favorable for all parties concerned.” The attempt by the Dallas-based buyout fund to sell a controlling stake of Korea Exchange Bank to HSBC has been stalled for months. The financial authorities under the previous government refused to approve the deal, citing legal disputes involving Lone Star. Prosecutors have claimed Lone Star’s acquisition of KEB in 2003 was made at an artificially low price. Foreign investors, including Lone Star, have claimed that the delay is an indication of a bias in Korea against foreigners making profits here. “There is a change in the government’s stance on the sale of Korea Exchange Bank,” Jun said in a press conference in Seoul. Jun returned Monday after accompanying President Lee on his U.S. trip last week. “The previous government was passive, saying it would wait until the legal uncertainty is resolved,” Jun said. “But we hope to find a solution as soon as possible that can benefit all parties concerned, considering the signal it could send to the international financial community and the impact it could make on fostering a global financial center in Korea.” In a pending legal case, several former Korean government officials are accused of having been involved in lowering KEB’s share price to sell the then-ailing bank. Lone Star has not been accused directly, but is not free from suspicion, given its confirmed involvement in a similar case. Paul Yoo, head of Lone Star’s Korea operations, was convicted and jailed on Feb. 1 for five years for manipulating the stock price of KEB’s credit card unit in order to acquire it cheaply. Lone Star and KEB were also found guilty of manipulation. Last December, Lone Star signed a deal with HSBC, Europe’s largest bank, to sell its 51 percent stake in KEB for $6.2 billion. The deal is to expire on April 30. In the press conference, Jun also talked about the planned privatization of Korea Development Bank, saying concrete plans will be finalized by early next month. The 100 percent government-owned bank has 140 trillion won ($141 billion) in assets and is the first of several state-controlled companies that the new government wants to privatize. It is seen as a gauge of the commitment of the new government to implementing its ambitious plans. Jun said he will consider making it easier for foreign investors to buy stakes in the bank. “To help global investment banks take over stakes in the bank is worth reviewing, as it could lift the value of the bank,” he said. The FSC plans to privatize KDB in three years. By Moon Gwang-lip Staff Reporter [joe@joongang.co.kr] |
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