London-based Standard Chartered has confirmed its acquisition of Korea First Bank, South Korea's eighth-largest retail bank, for $3.3 billion in cash.
Standard Chartered said that it would finance the acquisition, which is expected to be completed by the end of April 2005, via a $1.88 billion share placing. Korea First is expected to represent approximately 22% of Standard Chartered’s assets post acquisition.
The UK bank has remained intent on building a bigger presence in South Korea since missing out on another Korean bank, Koram, which was bought by Citigroup last year. This time Standard Chartered beat rival banking giant HSBC to the acquisition of Korea First Bank.
Standard Chartered said that the South Korean economy, which is the world’s tenth largest economy, is expected to grow by 4.3% in 2005. Korea’s banking sector generates a revenue pool estimated to be worth approximately $44 billion, over three times the size of Hong Kong, according to Standard Chartered estimates.
Although its shares fell 4% following news of the acquisition, Standard Chartered said that Korea First would provide a robust platform for growth in both wholesale and consumer banking.