As per the merger agreement, Korea Development through a purchase and assumption transaction will acquire all deposits received and mortgage lending bonds, as well as the 11 branches that HSBC has in Korea, according to Wall Street Journal.
"We expect the (latest deal) to secure more branches and… eventually help the ongoing initial public offering process by boosting corporate value," KDB said.
The deal, which is subject to financial regulatory approval and due dilligence, is expected to strengthen KDB retail financing business while HSBC’s decision to sell its Korean retail banking business is a part of its strategy to concentrate on its core banking operations.
On completion of the transaction, KDB will own 76 branches in South Korea and has plans to boost the number to 135 by next year.
KDB Financial, formed in October 2009, is 90.3% owned by Korea Financial while the remaining stake is owned by the Ministry of Strategy and Finance.
The South Korean Government is considering to privatize KDB Group by May 2014.
