Talks on DBS acquisition of Korean bank fall apart

US investment firm Lone Star has stopped talks with Singapore's DBS Group Holdings to sell Korea Exchange Bank, a report said.

Lone Star chairman John Grayken did not give the reason for the end of the talks, but told Yonhap the Dallas- based fund would keep looking for a buyer for KEB, despite a legal battle over the 2003 purchase of the bank.

South Korean prosecutors said in December the US$1.2 billion (HK$9.36 billion) acquisition was illegal because of flaws in the sale process.

Grayken said DBS had approached Lone Star after talks for a US$7.3 billion sale of KEB to top South Korean lender Kookmin Bank were terminated in November.

Several other investors had asked for negotiations to buy KEB, South Korea's fifth-largest bank, but little progress has been made, the chairman added, declining to identify them.

DBS had worked to form a consortium with South Korean bank Nonghyup to buy KEB.

The fund may put part of its KEB shares up for sale if it failed to sell its whole 64.62 percent stake in the lender, the chairman said. It can sell up to a 70.87 percent stake in KEB.

His remarks contrasted with analysts expectation that the fund would not be able to sell KEB until all legal proceedings were settled, and instead would focus on receiving dividends from KEB.

REUTERS