HSBC ready to update KEB bid application

SEOUL (Reuters) - HSBC said on Monday it was ready to submit an updated application to South Korean authorities on its bid for Korea Exchange Bank (KEB), while a regulatory official said HSBC had been in negotiations to cut the purchase price.

South Korean government officials have speculated that Europe's biggest bank might be trying to lower the $6.3 billion (3.2 billion pound) price tag to reflect KEB's (004940.KS) weaker share price, which would delay any announcement to keep the deal afloat.

"I am aware of price renegotiations underway (between HSBC and Lone Star)," Financial Services Commission (FSC) Vice Chairman Lee Chang-yong told Reuters by telephone, confirming a local media report. But he did not elaborate further.

HSBC Holdings (HSBA.L) agreed to buy a 51 percent stake in the South Korean bank from U.S. private equity firm Lone Star LS.UL last September on the condition the deal would receive regulatory clearance. But a July 31 deadline for HSBC's offer passed without the necessary approval.

"I'm convinced that the Korean government is doing everything it can to progress this transaction," an HSBC Korea spokeswoman quoted the bank's local chief, Simon Cooper, as saying.

"We will submit a revised application to the FSC as soon as practicable."

Under the original agreement, HSBC was supposed to pay 18,045 won or $19.2 per share, according to HSBC's conversion rate -- a 23 percent-plus premium to KEB's September 3, 2007 closing price.

KEB shares trimmed losses to close 1.2 percent down at 12,900 won on Monday. But the share price is still down 12 percent from when the deal was announced.

On Sunday, Yonhap news quoted an unnamed government official as saying that HSBC might not be able to announce an extension of the deadline for the completion of the deal on August 4 when it was set to announce results, if it failed to revise the price tag by then.