The London bank agreed to the purchase a year ago but even then knew it might never happen. Its target, the sixth-largest lender in Asia's No. 4 economy, was bound up in related prosecution probes -- some would say vendettas -- against Lone Star and third parties involved in the Texas fund's politically unpopular 2003 purchase of the bank and its credit card unit. As a consequence, regulators dragged their feet on clearing the HSBC transaction, and two deadlines for completion passed. More recently markets have imploded, and quite naturally HSBC wanted to cut the price. It said Friday it couldn't reach an agreement with Lone Star on revised terms and so had decided to walk away.
HSBC has lost another opportunity to establish a serious presence in South Korea but it could also be keeping its powder dry for cut-price deal. Earlier this week its name emerged as a suitor for stricken investment bank Morgan Stanley, though that particular bid speculation has now shifted to China Investment Corp. and Wachovia Corp. - Laura Board.
