Close the book on Lone Star

Home > Opinion > Editorials

print dictionary print

Close the book on Lone Star

Korea Exchange Bank has finally received approval to end its scandalous nine-year marriage to Lone Star and start anew under the umbrella of Hana Financial Group. The Financial Services Commission last week endorsed Hana Group’s bid to purchase a controlling stake in KEB from the U.S. private equity fund.

The commission ended the long-running dispute over the legitimacy of Lone Star’s qualification to serve as the largest shareholder in KEB by reaffirming the Texas-based buyout company as an approved financial investor. The FSC made the right decision to finally end the years-long saga. If the sale was delayed yet again, the protracted stalemate could have emerged as a sensitive political issue during this election year.

The recently renamed Democratic United Party announced that it opposes the FSC’s decision and plans to continue pressing the legitimacy and legality of Lone Star’s investment through a parliamentary investigation. Opposition members of the National Policy Committee warned that they will hold the financial authorities accountable for Lone Star’s controversial buyout gains in KEB and strive to ensure the government pays a high price during the legislative and presidential elections. But such threats do little to help the financial industry or serve the national interest.

The argument that Lone Star cannot voluntarily sell its stake in KEB because the fund ranks as a nonfinancial firm, and instead should be forced to sell the asset at a punitive bargain rate, will not win international consensus and could undermine the credibility of government policy. If Lone Star’s qualification is questioned, so should previous buyout deals involving KorAm Bank, by Carlyle Group, and Korea First Bank, by Newbridge Capital. The two capital funds also raked in huge profits by selling their stakes to Citibank and Standard Chartered, respectively.

But their exits from the country did not raise anywhere near as much controversy. Lone Star’s sale has met with extraordinary resistance because its profits were made using a local player - Hana Financial - and because Lone Star’s sale was decided under the Roh Moo-hyun administration. Members of the then-ruling Democratic Party should also take responsibility if Lone Star was not properly qualified to take part in the financial deal in the first place.

Politicians should not add to the controversy. It is their job to help put KEB out of its misery, once and for all.
Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
s
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)