KDB seals deal to acquire HSBC Korea

KDB Financial Group said on Monday it has signed a memorandum of understanding with HSBC to acquire the U.K-based bank’s retail operations in Korea.

KDB said the takeover of 11 retail branches of HSBC Korea would be implemented in the form of purchase and assumption.

The lender said due diligence is scheduled for the assets to be acquired, and a sale and purchase agreement would be signed. The process, including regulatory approval, should be finished quickly.

The P&A deal does not involve a transfer of money as KDB takes over HSBC’s deposit reserves and the same amount of loans outstanding at the same time.

There is no premium or marketing rights involved in the contract, KDB said, adding that a selective acquisition of safer loans would lower take-over risks.

The deal came as KDB continued to make efforts to buy a local bank as part of efforts to privatize the group and beef up its competitiveness.

To bolster its retail banking, KDB is also promoting online direct banking services and setting up more branch offices.

KDB said the acquisition of HSBC Korea would offer key momentum for the group’s growth: “In addition to the expansion in branch offices, KDB will secure a premium client base and advance its private banning service, thereby enhancing its corporate value ahead of the initial public offering.”

The HSBC deal will increase the number of branches to 76. KDB plans to add more offices across the nation to boost the number to 135.

By Yang Sung-jin (insight@heraldcorp.com)