Hana buys final KEB shares

Hana Financial Group has made its first move to own all of Korea Exchange Bank by acquiring the remaining shares it doesn’t own.

The move brings it into conflict with KEB’s labor union because the independence of the smaller banks was guaranteed until 2017.

Hana Financial Group said yesterday it plans in April to buy the remaining 40 percent stake in KEB, the nation’s No. 5 lender, by swapping shares.

Hana Financial completed a deal to buy a 51.02 percent stake in KEB from Lone Star Funds for 4.69 trillion won ($4.34 billion) in February 2012, making it Korea’s No. 3 banking group. It bought more shares to raise its holdings to 60 percent last year.

The group said it plans to buy the balance from KEB shareholders by swapping its shares for 5.28 KEB shares.

The group said the swap will be made in early April after it gains approval from a shareholders’ meeting scheduled for March 15.

“The move will help boost the group’s share prices by dispelling uncertainty and raise the value of the group,” Hana Financial Group said in a statement.

It added that the swap will not compromise its post-takeover agreement with the KEB labor union made in February.

Hana promised to run KEB as an independent entity and maintain its current brand and wage system until at least 2017.

But the KEB union claimed the swap was in clear violation of the agreement, which stipulates that Hana Financial may begin talks with the union on a possible merger process five years after the takeover.

“The agreement made between the union and the management on Feb. 17, including the Hana Financial Group Chairman and the Korea Exchange Bank President, not only guarantees KEB’s independent management for the next five years but also the condition that a merger of the two institutions will be decided through an agreement between the labor union and management,” the union claimed in a statement released yesterday. “Any decision based on the merger of the two institutions is a serious violation.” It added that if Hana succeeds in securing the remaining shares it will lead to an immediate delisting of KEB.

The union claimed that Hana was nullifying the agreement and therefore the acquisition of KEB should be scrapped.

The union added that each and every employee of the bank will take aggressive action.

Hana’s taking full control of the smaller lender comes at a sensitive time when fears of layoffs have been growing.

The banking industry is expecting a huge drop in sales and profits as the global slowdown continues and a low interest rate policy driven by the government has eaten into earnings.

“Although there hasn’t been an official announcement of a corporate restructuring, there is an unspoken fear among bank employees that a corporate restructuring is imminent as the performance in the last three months of last year was much worse than what the market speculated,” said a bank industry official.

By Lee Ho-jeong, Yonhap [ojlee82@joongang.co.kr]