Hana board seen to approve share swap with KEB this week

The board of Hana Financial Group Inc. will likely approve the banking group's plan to complete its takeover of Korea Exchange Bank (KEB) through swapping shares this week, amid strong opposition from KEB's labor union, bank officials said Monday. Hana Financial is scheduled to hold a board meeting on Friday to decide whether to approve the purchase of a 40 percent stake through a share swap on April 5, which will raise its interest in KEB to 100 percent. South Korea's No. 3 banking group plans to fetch 5.28 KEB shares for each of its shares, as part of a move to wrap up its takeover of the country's fifth-largest lender by placing KEB under its wing as a wholly-owned subsidiary, about a year after it acquired the lender from U.S. buyout fund Lone Start Funds. An official from Hana Financial said "there will be no problem in making the swap deal." Hana Financial's move sparked strong opposition from the unionized workers at KEB, who claim that the share swap is in clear violation of an earlier agreement, which stipulates that Hana Financial will not begin merger talks with KEB for the first five years of the takeover. Hana Financial would nullify the share swap if the value of shares owned by those opposing the plan exceeds 1 trillion won (US$917.8 million). Experts forecast, however, the opposition's share value will not likely reach the figure, as the latest share prices of the two banking firms give their shareholders a considerable premium.