KDB backing out of purchase of HSBC branches in KoreaKorea’s state-run KDB Financial Group said yesterday it will no longer seek to buy local branches of HSBC Holdings Plc due to differences over employee retention after a takeover.
The decision came after Korea Development Bank, the flagship banking unit of KDB Financial, signed a memorandum of understanding with the British banking giant in April to acquire 11 local branches and retail banking operations of HSBC.
“We have decided not to pursue the takeover any longer as both sides remain wide apart over how to retain HSBC workers,” KDB Financial said in a statement.
According to industry sources, HSBC employees receive a much higher salary than KDB workers, which has surfaced as a major stumbling block to the takeover talks. The takeover deal has been strongly pushed by KDB Financial chief Kang Man-soo as part of the group’s plans to bolster its deposit base ahead of its ongoing privatization plan.