"The difference is too huge,", the chairman of Korea's Financial Supervisory Commission (FSC), Lee Hun-jai said. "It would be very difficult to narrow. HSBC is asking too much. "There are no longer talks between SeoulBank and HSBC," he added bluntly.
A spokesman for HSBC declined to comment, except to say: "We are awaiting confirmation from the Korean government about the report."
Under a memorandum of understanding signed in February, HSBC agreed to buy 70 per cent of SeoulBank for $700m and to pay the government a $200m "facilitation fee". The government was also to keep 30 per cent and take warrants equal to 19 per cent of the equity.
In return, the government promised to assume the bank's past bad debts. But two deadlines have already been missed when HSBC and the FSC failed to agree on how much of the bank's assets should be defined as bad debt.
South Korea agreed to sell two loss-making banks to foreign investors at the end of 1997 to bring "best international practice" to its local financial industry as a condition of the $58bn bailout by the International Monetary Fund at the height of the Asian financial crisis.
In July it injected $4.5bn to recapitalise the other bank, Korea First, which Newbridge Capital, a US investment fund, is taking over in a $600m deal.Reuse content