HSBC says committed to KEB but can't wait forever

By Kim Yeon-hee

SEOUL (Reuters) - HSBC (HSBA.L) said on Monday it was committed to a $6.3 billion (3.2 billion pound) takeover of South Korea's No. 6 bank, but warned it would not wait forever for approval of a deal seen as a major test of the country's openness to foreign investors.

A newspaper report the deal might fall through had pushed shares in the target, Korea Exchange Bank (KEB) (004940.KS), more than 2 percent higher on expectation that if HSBC pulled out there might be a bidding war among domestic banks for KEB.

"HSBC is committed to the acquisition, but we can't wait forever," the bank quoted the head of its South Korean operations, Simon Cooper, as saying.

"We are hopeful that the government will take appropriate action."

The London-based bank (0005.HK) extended the deadline in April on its offer to buy a majority of KEB from U.S. investment fund Lone Star LS.UL by three months to the end of July, which awaits South Korean regulatory approval.

Lone Star's PR agency in Seoul and KEB declined to comment.

The new conservative government of President Lee Myung-bak, which took office in February, has made clear it recognises that the KEB deal will be seen as a litmus test of its pledge to opening up Asia's fourth largest economy far wider to foreign investment.

But the deal has been held up by legal disputes over Lone Star's 2002 KEB purchase and its involvement in controversial decisions by the South Korean bank.