committed to a $6.3 billion takeover of South Korea's No. 6
bank, but warned it would not wait forever for approval of a
deal seen as a major test of the country's openness to foreign
A newspaper report the deal might fall through had pushed
shares in the target, Korea Exchange Bank (KEB) (004940.KS),
more than 2 percent higher on expectation that if HSBC pulled
out there might be a bidding war among domestic banks for KEB.
"HSBC is committed to the acquisition, but we can't wait
forever," the bank quoted the head of its South Korean
operations, Simon Cooper, as saying.
"We are hopeful that the government will take appropriate
The London-based bank (0005.HK) extended the deadline in
April on its offer to buy a majority of KEB from U.S.
investment fund Lone Star (LS.UL) by three months to the end of
July, which awaits South Korean regulatory approval.
Lone Star's PR agency in Seoul and KEB declined to comment.
The new conservative government of President Lee Myung-bak,
which took office in February, has made clear it recognizes
that the KEB deal will be seen as a litmus test of its pledge
to opening up Asia's fourth largest economy far wider to
But the deal has been held up by legal disputes over Lone
Star's 2002 KEB purchase and its involvement in controversial
decisions by the South Korean bank.
Chairman of the regulatory Financial Services Commission
(FSC), Jun Kwang-woo, told reporters in April that the
government was studying how to help seal the KEB sale, hoping
for a quick resolution.
But he said there was no change to its basic stand that a
final decision would have to wait for the legal disputes to be
settled in the courts.
Jun is due to meeting financial regulators and executives
of European banks on a trip to Paris and London this week.
Earlier, the Financial Times on its Web site (www.ft.com)
reported that HSBC may drop out of the delayed KEB purchase if
no progress is made within weeks.
"Sentiment is finely balanced but HSBC would likely look
... elsewhere if there is no movement," it quoted an unnamed
person familiar with the British bank's thinking as saying.
But some analysts said they expected the deal to go through
"If the deal is pulled, that would not be good for the
growth of HSBC's business in Asia," said Y.K. Lee, an analyst
of Core Pacific-Yamaichi.
KEB shares were up 1.7 percent to 15,250 won by 0355 GMT,
after running up as much as 3 percent, against the wider
market's (.KS11) fall of 1.5 percent.
Han Jeong-tae, an analyst at Hana Daetoo Securities, said
that domestic banks would likely jump into the bidding if HSBC
"Their rising interest in KEB would make M&A momentum
stronger and in a consequence could be a favorable factor for
KEB shares," he added.
(Additional reporting by Park Ju-min and Lee Chang-ho in
Seoul and Tony Munroe in Hong Kong; editing by Jonathan
Insurance Australia Group Ltd
(IAG.AX), which last week spurned a takeover offer by rival QBE
(QBE.AX), said on Monday its Chief Executive Michael Hawker had
resigned with immediate effect, triggering a 3 percent jump in
IAG shares slumped last week after it rejected as too low
an A$8.7 billion ($8.3 billion) takeover offer by rival QBE
Inurance Ltd (QBE.AX).
It did not put the offer to shareholders and some large
institutional shareholders including fund manager 452 Capital
said IAG did not give sufficient reason for rejecting the
IAG, the country's top home and car insurer, said Hawker
will be replaced by Chief Operating Officer Michael Wilkins.
"I believe we are currently undervalued and our underlying
performance is improving, however, I also believe I have lost
the confidence of a number of our shareholders which is not
tenable for the company," Hawker said in a statement.
Chairman James Strong said IAG was conducting a review of
every aspect of its business in Australia and overseas and it
planned to brief the market on the results of the review in
QBE scrapped its revised offer on May 21, after offering a
10 percent premium to IAG's share price before the deal talks
were revealed in April.
QBE said the relatively low premium was justified in the
light of AIG's falling profits over the past three years and a
profit downgrade last month.
Analysts expect IAG, which controls about one-third of
Australia's general insurance market, to report a 55 percent
drop in profit this year.
IAG shares were up 2.0 percent at A$4.06 at 0018 GMT.
(Reporting by Victoria Thieberger; editing by Jonathan
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