S&P not keen on Hana Bank's acquisition of KEB

The ratings company saw risk on the company's financial health as it may be adversely affected due to takeover of KEB from Lone Star Funds.

Standard & Poor's Ratings Services (S&P) said Saturday that it continues placing Hana Bank on its "negative watch" list as the lender is getting closer to complete the acquiring of Korea Exchange Bank (KEB).

Hana Financial clinched a deal last November with U.S. buyout fund Lone Star Funds to buy South Korea's fifth-largest lender for 4.69 trillion won (US$4.19 billion), which it said would be paid with internal funds and the proceeds from new share and bond sales.

The international credit agency gave the lender a negative status following the announcement, which has long- and short-term bond credit ratings of "A" and "A-2," respectively. S&P said there is a risk the company's financial health may be adversely affected due to the move to buy KEB from U.S.-based Lone Star Funds.

"The 'CreditWatch' negative status continues to reflect our assessment that there is at least a 50 percent chance of Hana being downgraded primarily due to the immediate financial impact on Hana (Bank) and the parent company, Hana Financial Group Inc., from funding the KEB acquisition," S&P said in a statement.

The rating agency added, however, that it intends to review Hana Financial Group's capitalization levels after the completion of the transaction in addition to reviewing KEB's financial profile.

View the full story in Korea Times.