HSBC Holdings PLC, the London-based global bank, has abandoned its efforts to acquire South Korea's SeoulBank after failing to agree on a price for the bank with the South Korean government.
In a brief announcement on Tuesday, HSBC said it had agreed with the South Korean government to discontinue negotiations and halt the transaction.
HSBC had offered $900 million to acquire 70% of SeoulBank subject to due diligence. The South Korean government was to retain a 30% stake. Buying SeoulBank, which has 291 branches, would have given HSBC one of the largest commercial banking networks in the country.
Like other major South Korean banks, SeoulBank racked up billions of dollars in bad loans after a financial crisis in Asia triggered an economic recession across the region. Several large banks were merged as a result, while SeoulBank and Korea First Bank were put up for sale by the government. A similar agreement to sell Korea First to a group of investors headed by Newbridge Capital Ltd. of the United States also collapsed.
Banking sources said HSBC had grown concerned about proceeding after estimating that the credit quality of the loans was worse than expected. The bank said in a prepared statement Tuesday that it planned to continue developing its operations in Korea through the four commercial branches it currently runs as well as through the offices of its subsidiary, HSBC Investment Bank. -- James Kraus