Hana Bank

From Wikipedia, the free encyclopedia
Hana Bank
Typefinance
Industryfinancial services
Founded1967; 54 years ago (1967)
DefunctSeptember 1, 2015
Fateclosed
HeadquartersSeoul, Republic of Korea (South) + overseas branches
Key people
Yun Yong-Ro (Founder), Park Jae Han (CEO)
Productsfinancial products
1,330.8 billion won (1H2011)
Number of employees
5,695 (2007)
ParentHana Financial Group
WebsiteOfficial website
Hana Bank
Hangul
하나은행
Hanja
韓亞銀行
Revised RomanizationHana Eunhaeng
McCune–ReischauerHana Ŭnhaeng

Hana Bank is the fifth largest bank in South Korea measured in assets (excluding IBK and KDB) and the largest foreign exchange bank in South Korea, providing the largest range of foreign exchange products. It is headquartered in Seoul, and was established in 1967.

Acquisitions[]

Korea Exchange Bank was acquired in 2003 by Lone Star Funds, a private U.S. equity fund, as part of the general reorganization of the South Korean financial sector following the Asian financial crisis.

In 2006, Lone Star tried to sell the company to the highest bidder, Kookmin Bank, but the plan was scrapped when it faced investigations by South Korean prosecutors and regulators.

In September 2007, HSBC agreed to purchase a controlling stake for $6 billion, but the sale was not approved by the South Korean government.

In September 2008, Kookmin Bank and Hana Bank were considered for a takeover of KEB after HSBC failed to acquire the bank in 2007.[1]

In February 2012, Hana Financial Group Inc. completed its ₩4.4 trillion (equivalent to ₩4.68 trillion or US$4.14 billion in 2017)[2] purchase of Korea Exchange Bank from Lone Star Funds and Export Import Bank of Korea.[3]

Controversial Issues regarding the Acquisition of Korea Exchange Bank[]

These issues happened in the process of the acquisition and sale of Korea Exchange Bank(KEB) by Lone Star Funds, a private U.S. equity fund.

The issues caused a lot of conflicts between Lone Star Funds and South Korean regulatory authorities.[4]

According to the Banking Act of South Korea, Article 2 defines,

"The term "non-financial business operator" means a person falling under any of the following items:

(a) The same person with respect to which the total amount of gross capital (referring to the gross amount of assets less the gross amount of debts, on the balance sheet; hereinafter the same shall apply) of persons who are non-financial companies

(referring to companies that run such non-financial businesses as determined by the Presidential Decree; hereinafter the same shall apply) is not less than 25/100 of the total amount of gross capital of persons who are companies;

(b) The same person with respect to which the total amount of gross capital of persons who are non-financial companies is not less than such an amount as prescribed by the Presidential Decree, which is not less than two trillion won; and

(c) A securities investment company under the Securities Investment Company Act (hereinafter referred to as the "securities investment company") with respect to which a person as referred to in item (a) or (b) holds more than 4/100 of the total number

of the issued stocks (referring to the case that the same person owns stocks under his or another person's name or has voting rights to them through a contract, etc.; hereinafter the same shall apply)."[5]

Therefore, Lone Star Funds might have been considered as non-financial business operator.[6]

Issues regarding the acquisition[]

In 2003, Lone Star Funds tried to acquire Korea Exchange Bank. It was controversial because, according to the Banking Act, non-financial business operator is not entitled to acquire a bank unless a bank’s BIS ratio is below 8%.[7]

Consequently, the president of KEB, Kang-won Lee sent the report that Korea Exchange Bank’s BIS ratio was assessed as 6.16% as of July 25, 2003. Based on the report, the Financial Supervisory Service approved the acquisition.[8]

Hence, Lone Star Funds was able to acquire the bank at the price of about 1.3 billion dollars as of October 2003.

However, after the acquisition, as the stock price of Korea Exchange Bank rose, Lone Star got about $1 billion of an appraisal profit within 3 months.[9]

Therefore, in the national assembly inspection of 2005, is arisen the suspicion that Korea Exchange Bank was sold at significantly lower price than its fair market value because BIS ratio was assessed with the pessimistic scenario, given that KEB's BIS ratio had been assessed between 8.24% and 9.14% according to the three reports written between May 17, 2003 and July 16, 2003.[10]

Thus, the national assembly of South Korea ordered the Board of Audit and Inspection to investigate the suspicion.

On June 2006, the Board concluded that the BIS ratio of 6.16% was assessed as unreasonably low under the unrealistically pessimistic scenario.[11]

Following the conclusion of the Board of Audit and Inspection, on November 2006, the prosecution started an investigation on the issue and prosecuted Kang-won Lee, the former president of Korea Exchange Bank, for breach of duty.[12]

On November 2008, the trial court ruled for Lee, and the verdict did not change in both appellate court and the Supreme Court.[13][14]

Issues regarding the sale[]

From January 2006, Lone Star Funds pursued the sale of KEB. However, during the period, there were the ongoing investigations and trials regarding KEB, and thus South Korea’s financial regulators did not approve each attempt.[15]

The disapproval was because the potential possibility of Lone Star’s invalid ownership depending on the results of the trial.

In September 2007, Lone Star Funds and HSBC had a preliminary agreement for the sale of KEB. However, the Financial Services Commission was still holding off the approval.[16]

After the 2008 global financial crisis, on September 19, 2008, HSBC gave up the acquisition of KEB.[17]

Eventually, on February 9, 2012, Lone Star Funds were forced to sell the KEB to Hana Financial Group due to the guilty verdict from the Korea Exchange Bank Credit Service stock manipulation case.

On November 22, 2012, Lone Star brought arbitration against South Korea before the International Center for Settlement of Investment Disputes (ICSID).[18]

Lone Star Funds alleged the Korean regulatory authorities' failures to approve the purchase by third parties of claimant’s stake in Korea Exchange Bank, and the unfair imposition of arbitrary capital gains taxes on the sale by Korean tax authorities.[19]

Lone Star claimed that the delay of approving Lone Star’s sale of KEB shares until the forced sale was illegitimate because it was upon the hostility of public opinion against Lone Star Funds, and the delay caused the financial loss because they had lost other chances to sell at higher price due to the delay. In addition, Lone Star claimed that South Korea’s tax authorities applied inconsistent and arbitrary standards for the transfer income tax regarding the sale of KEB shares for the purpose of extracting the maximum amount of taxes from Lone Star.[20][21]

For the compensation, Lone Star Funds demands about $4.7 billion, and the arbitration is ongoing in 2020.[22][23]

History[]

Korea Exchange Bank was established in 1967 as a government-owned bank specializing in foreign exchange. It was privatized in 1989 and was one of Korea's first commercial banks.

  • January 1975:Started securities business
  • April 1978:Launched Korea's first credit card service
  • March 1983:Issued travelers cheques
  • February 1985:Official sponsor bank for 1986 Asian Games & 1988 Seoul Olympic Games
  • April 1994:Listed on Korean Stock Exchange
  • December 1995:Opened foreign exchange research center
  • November 1999:Opened a foreign exchange website offering exchange rate conversions and foreign exchange services
  • April 2001:Opened the foreign exchange website FXKEB.COM
  • June 2002:Introduced ATM services in foreign currency - a first for Korea

During the 2002 World Cup Games in Korea and Japan, KEB was the first Korean bank to export Korean won to another nation, by exporting bundles of 10000 won notes to Japan.

  • Oct 2003: Acquired by Lone Star Funds
  • Feb 2004: Merged Korea Exchange Bank Credit Service Co.
  • Aug 2014: Korea Exchange Bank Credit Group Separated from Korea Exchange Bank
  • Jan 2015: Launched 1QBank and the 1Q INSTA Card in Canada, becoming the first bank in Canada to offer a prepaid Interac card not linked to a bank account.
  • Feb 2019: Name changed (KEB Hana Bank => Hana Bank)
  • June 2021: Secured approval from Taiwan's financial authorities to open a branch in Taiwan, making it the first bank from South Korea to set up a foothold in Taiwan.[24]

Foreign Exchange[]

Korea Exchange Bank is the largest and longest-running exchange bank in South Korea, with 40% of South Korea's foreign exchange market. Its exchange services include currency exchange and wire transfers.

KEB exchanges the following currencies:

All KEB branches in South Korea provide foreign exchange services. Some of the more common currencies, such as US Dollar, euro, and Japanese Yen are available at all KEB branches.

Travellers Cheques were first introduced in South Korea by Korea Exchange Bank, through Visa. Today, many Travellers Cheques companies offer travellers cheques through Korea Exchange Bank.

Korea Exchange Bank is one of few specialized banks in South Korea that buys and sell foreign currency coinage. Foreign currency coinage exchangeable at KEB are:

Other commercial banks in South Korea that provide foreign exchange services include Kookmin Bank and Shinhan Bank.

See also[]

  • Economy of South Korea
  • List of South Korean companies
  • List of Banks in South Korea
  • List of Korea-related topics

References[]

  1. ^ Kookmin, Hana Jockeying for KEB Takeover
  2. ^ 1906 to 1911: Williamson J., Nominal Wage, Cost of Living, Real Wage and Land Rent Data for Korea 1906-1939 1912 to 1939: Mizoguchi, T. (1972). CONSUMER PRICES AND REAL WAGES IN TAIWAN AND KOREA UNDER JAPANESE RULE. Hitotsubashi Journal of Economics, 13(1), 40-56. Retrieved May 21, 2021. Afterwards, consumer Price index from Statistics Korea. Consumer Price Index by year. Retrieved 3 April 2018
  3. ^ "Hana completes takeover of Korea exchange bank".
  4. ^ GRAIN. "What's at stake : South Korea vs Lone Star Funds". www.bilaterals.org. Retrieved 2020-04-29.
  5. ^ "NATIONAL LAW INFORMATION CENTER | LAW SEARCH - BANKING ACT". www.law.go.kr. Retrieved 2020-04-29.
  6. ^ "론스타는 금융자본일까 산업자본일까, 논란 재점화 - 매일노동뉴스". www.labortoday.co.kr (in Korean). Retrieved 2020-04-29.
  7. ^ "[DBR] 외환은행 논란 뒤에 숨은 진실". 동아비즈니스리뷰 (in Korean). Retrieved 2020-04-29.
  8. ^ Schopf, James. (2007). The Lone Star Scandal: Was it Corruption?.
  9. ^ "[DBR] 외환은행 논란 뒤에 숨은 진실". 동아비즈니스리뷰 (in Korean). Retrieved 2020-04-27.
  10. ^ "[DBR] 외환은행 논란 뒤에 숨은 진실". 동아비즈니스리뷰 (in Korean). Retrieved 2020-04-29.
  11. ^ "감사원 ＂자격없는 론스타에 외환은행 헐값 매각＂". www.donga.com (in Korean). 2006-06-19. Retrieved 2020-04-27.
  12. ^ 지면보기, 입력 2006 11 07 04:02 수정 2006 11 07 09:14 | 종합 1면 (2006-11-07). "이강원 전 행장 구속 수감". 중앙일보 (in Korean). Retrieved 2020-04-29.
  13. ^ 백나리 (2008-11-24). "법원 "론스타 외환銀 인수 불법아니다"(종합3보)". 연합뉴스 (in Korean). Retrieved 2020-04-27.
  14. ^ 이웅 (2010-10-14). "'외환銀 헐값매각' 변양호 무죄 확정(종합)". 연합뉴스 (in Korean). Retrieved 2020-04-27.
  15. ^ GRAIN. "What's at stake : South Korea vs Lone Star Funds". www.bilaterals.org. Retrieved 2020-04-29.
  16. ^ GRAIN. "What's at stake : South Korea vs Lone Star Funds". www.bilaterals.org. Retrieved 2020-04-29.
  17. ^ 입력: 2008.09.19 18:04 (2008-09-19). "HSBC, 외환은행 인수 포기". news.khan.co.kr (in Korean). Retrieved 2020-04-29.
  18. ^ 수정: 2012.11.22 11:55, 입력: 2012 11 22 11:49 (2012-11-22). "론스타, ICSID에 한국정부 제소 "수조원 물어내라"". biz.khan.co.kr (in Korean). Retrieved 2020-04-29.
  19. ^ "LSF-KEB v. Korea | Investment Dispute Settlement Navigator | UNCTAD Investment Policy Hub". investmentpolicy.unctad.org. Retrieved 2020-04-29.
  20. ^ GRAIN. "What's at stake : South Korea vs Lone Star Funds". www.bilaterals.org. Retrieved 2020-04-29.
  21. ^ 수정: 2012.11.22 11:55, 입력: 2012 11 22 11:49 (2012-11-22). "론스타, ICSID에 한국정부 제소 "수조원 물어내라"". biz.khan.co.kr (in Korean). Retrieved 2020-04-29.
  22. ^ "론스타 ISD '7년차' 의장중재인 돌연 사임…연내 결론 어려울 듯". 서울경제 (in Korean). 2020-03-06. Retrieved 2020-04-29.
  23. ^ "[탐사K] 론스타 주장 47억 달러 실체, 4가지 쟁점 분석". KBS 뉴스 (in Korean). Retrieved 2020-04-29.
  24. ^ "KEB Hana Bank obtains greenlight to open branch in Taiwan - Focus Taiwan". focustaiwan.tw (in Chinese). Retrieved 2021-06-20.

External links[]

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