No more delays on KEB sale

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No more delays on KEB sale

The government has again put off deciding whether Lone Star Funds is eligible to serve as major shareholder of Korea Exchange Bank or whether Hana Financial Group is a better choice to take over the bank.

In fact, they seem to have thrown in the towel - and that could put the multibillion-dollar deal on ice for another two to three years.

The dilemma facing the Financial Services Commission, which has decided to wait for the court before deciding on the deal, is understandable.

But there is no doubt that its dillydallying raises deep skepticism over whether it is really willing or capable of protecting the financial industry from hostile forces.

A court decision, however, does not change the circumstances for Lone Star. Even if the Seoul High Court rules that Lone Star and its former chief executive are innocent on charges of manipulating stock prices in order to buy Korea Exchange Bank for cheap during the acquisition scheme in 2003, they can still sell the bank at market price.

And if Lone Star is found guilty and ordered to sell the bank, it can just dump its stake in Korea Exchange Bank on the market.

Lone Star has already recovered its 2 trillion won ($1.83 billion) investment in Korea Exchange Bank.

It will only go on pocketing dividends as well as profits from sales of Hyundai Engineering and Hynix, of which Korea Exchange Bank is a major shareholder.

But Korea Exchange Bank and its potential buyer Hana Financial Group will no doubt be hard hit by the delay, hounded by local and foreign investors who bought stakes in Hana in anticipation of the merger.

In the process, Korea Exchange Bank will eventually lose credibility and competitiveness.

It is miserable to think that financial regulators might be delaying the decision over Korea Exchange Bank for fear of inciting controversy and blame later.

But we can hardly expect such feeble-minded authorities to defend and salvage the market and economy against financial risks from outside. Meanwhile, the Korea Exchange Bank sale has hit a deadlock for the third time now.

We hope the court’s decision will be handed down quickly and that the authorities will follow through with actions that will relieve the bank and its investors of their misery once and for all.
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