Kookmin Bank to sign formal agreement to buy KEB

Kookmin Bank, South Korea's leading lender, said Friday it will sign a formal agreement, possibly on the same day, with U.S. equity fund Lone Star on the terms for its acquisition of Korea Exchange Bank (KEB).

The announcement came after the bank's board members authorized the acquisition earlier in the day, the president of the bank said.

"After an in-depth discussion among board members since 9 a.m.,

they approved the share acquisition from Lone Star," Kang Chung-won said during a press briefing in Seoul.

"Kookmin will sign the final contract at the earliest possible date and apply for permission from the Financial Supervisory Commission."

The bank is expected to sign the final contract on either Friday or Monday, and file an application with the Financial Supervisory Service on Monday for government approval.

The bank plans to buy the 64.62-percent stake in KEB held by Lone Star for 6.3 trillion won (US$6.7 billion), at a per-share price of 15,200 won. Kookmin lowered the per-share price by 200 won during the two-month audit of the bank after it was picked as the final negotiator at the end of March.

The stake to be acquired could be raised to 70.87 percent if the Export-Import Bank of Korea decides to sell its 6.25 percent holding.

The payment for the deal will be delayed until prosecutors and the nation's audit agency wrap up their investigation into Lone Star's acquisition of KEB in 2003. The two have been investigating allegations that the fund bought KEB at a below-market price based on "manipulated" financial reports, as well as probing other charges such as tax evasion.

KEB unionists voiced opposition to Kookmin's decision.

"The union cannot accept the agreement until the suspicion over the 2003 acquisition is fully disclosed," said Kim Ji-sung, the head of KEB's union. "The union will fight using all possible means to block the sale."

The Texas-based fund is expected to earn more than 4 trillion won from the sale of KEB, 51 percent of which it bought for 1.38 trillion won in October 2003, as a two-year lock-up period ended late last year. Seoul, May 19(Yonhap News)