HSBC poised for $3bn Korean takeover

HSBC, Britain's largest bank, is set to buy Korea First Bank (KFB) in a $3bn (£1.56bn) deal which will give it a foothold in one of the fastest-growing Asian economies and put it head to head with its US rival Citigroup.

HSBC, Britain's largest bank, is set to buy Korea First Bank (KFB) in a $3bn (£1.56bn) deal which will give it a foothold in one of the fastest-growing Asian economies and put it head to head with its US rival Citigroup.

The UK bank could be named as preferred bidder as early as today for KFB, which is controlled by Newbridge Capital, the US private equity group. The London-listed Standard Chartered bank pulled out of the bidding earlier this month.

HSBC is also competing with Citigroup, the world's largest bank, which bought KorAm Bank for $2.7bn this year - the first foreign banking takeover in South Korea.

The bid is HSBC's third attempt to acquire a bank in South Korea, and its second attempt to buy KFB, the country's eighth largest lender. It is owned jointly by the South Korean government and Newbridge. Under the terms of Newbridge's purchase of its controlling 48.6 per cent stake in the bank five years ago, the Korean government has agreed to sell its own stake once Newbridge makes its disposal. The Korea Deposit Insurance Corporation, a state agency, owns 48.5 per cent of KFB, and the Seoul finance ministry holds the rest. The combined deal is estimated to be worth $2.5bn-$3.3bn.

KFB is an attractive target with more than 400 branches and more than 3.5 million customers. It posted a 76 per cent jump in third-quarter profits last month.

The global banks HSBC, Citigroup and Standard Chartered are all vying to expand in Asia. Of the three, Standard Chartered has fared worst this year, having been outbid for KorAm by Citigroup in May.

In August, HSBC landed a $1.75bn deal to buy a stake in Bank of Communications, China's fifth largest bank. Its purchase of a 19.9 per cent slice of the Shanghai-based bank was the largest foreign investment in China's financial sector. The move put it ahead of Citigroup and Standard Chartered in the world's most populous country.