Korea finalizes largest bank privatization


The SeoulBank sale is Korea's largest bank privatization, and the government expects to sell its 31 percent stake

SEOUL, South Korea -- South Korea completed the sale of SeoulBank to Hana Bank on Friday, its biggest bank privatization to date.

The government finalized the deal after Hana agreed to raise its offer to 1.15 trillion won ($965 million). The public fund oversight committee voted unanimously to approve the deal.

The merged bank will officially launch by the end of the year, with a contract signing likely this month.

Hana will become Korea's third-largest bank, after Kookmin Bank and Woori Bank.

Hana beat out U.S. investment fund Lone Star last month, with a 1.1 trillion won ($923 million) offer. (Full story)

Korea took over many of its banks during the Asian financial crisis. But it has struggled to dispose of its holdings, and the privatizations often become political hot topics.

Strategic partners sought

Many Korean companies have resisted sales to overseas buyers, fearing a loss of management control and lost jobs.

Hana is giving one Hana share for every two SeoulBank shares. The government has been SeoulBank's sole owner.

The government will hold a 30.9 percent stake in the new Hana and expects to raise at least 1.15 trillion won by selling that.

"The government will sell stakes in the merged bank to strategic investors but specific details are not decided yet," a Finance Ministry official told reporters.

Hana stock is down 2.4 percent early on Friday afternoon, at a time the broader Korean market is selling off heavily.

The Kospi is down 2.89 percent, and Kookmin shares are 3.9 percent lower.