S. Korea says may approve HSBC's KEB deal soon

South Korea may give the go-ahead to HSBC's €4.3 billion offer to buy control of Korea Exchange Bank (KEB) in the near future if it finds no faults with documents submitted by the companies involved, a regulator said yesterday.

"We have been reviewing the application since August 11 and my knowledge is that there have been no special problems with the process so far," financial services commission chairman Jun Kwang-woo told reporters in a briefing.

"We plan to request some supplementary documents in the process. If HSBC sticks with the contract with Lone Star and no problems are found with those additional documents, we will be able to approve it at an appropriate time."

HSBC, the world's second largest bank by market value, agreed to buy 51 per cent of KEB, South Korea's No. 6 bank, from US private equity house Lone Star LS.UL last September.

The deal is expected to propel the UK-based bank into the top ranks of Asia's third-largest banking market.

But the July 31 deadline for HSBC's completion of the transaction passed without regulatory clearance because of legal disputes surrounding Lone Star's investment activities in South Korea.

Mr Jun's remarks signalled further progress after the agency changed tack in late July when it said it was starting the approval process - taken as a sign the government wanted to move ahead with the deadlocked deal.

The long-running deal is seen as a test of whether South Korea is genuine in its pledges to open its financial sector wider to international investors.

The collapse of the sale would deal a blow to President Lee Myung-bak, whose reform plans have already been delayed by a backlash over a US beef import deal that sparked mass protests against his government this summer.