SEOUL — South Korean government-owned KDB Financial Group denied a report that it had signed a preliminary deal to buy HSBC Holdings PLC's South Korean retail banking operations.

Earlier Tuesday, Yonhap News cited KDB Financial Chairman Kang Man-soo as saying: "Efforts to acquire HSBC branches are going smoothly following the signing of a memorandum of understanding."

A spokesman for KDB denied that a memorandum of understanding had been signed. Kang had only said that talks over a possible deal were going smoothly, the spokesman said.

HSBC's Korean unit had 11 branches with assets totaling KRW30.02 trillion ($25.6 billion) as of the end of June, while Korea Development Bank, a key banking unit of KDB Financial, has 64 branches in Korea.

HSBC couldn't be immediately reached for comment.

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