HSBC eyes South Korean lender KEB

HSBC is looking to steal a march on rivals with its purchase of KEB

HSBC, the UK's largest bank, has said it is in talks to buy a 51% stake in Korean Exchange Bank (KEB) as it looks to expand into fast-growing markets.

The purchase would cost HSBC about $4.5bn (£2.3bn), and give it control of South Korea's fifth-largest lender.

The stake is being sold by investment group Lone Star, which has been caught up in a probe over allegations that it bought the KEB holding too cheaply.

HSBC is expected to complete the deal later this month, analysts said.

'Bigger network'

HSBC is looking to expand its businesses outside the US where problems with the housing market threaten to hurt earnings.

Earlier this year, HSBC said that its bad debt levels had risen in the US where the housing market faced "considerable difficulties", particularly in the sub-prime sector.

Sub-prime lending focuses on borrowers who have a poor or no credit history.

Analysts said that buying KEB would allow HSBC to grow in one of Asia's fastest-growing and most competitive markets.

"HSBC does need a bigger network for its South Korean business," said Han Jeong-tae, an analyst at Hana Daetoo Securities.

Any deal would need regulatory approval.