updated 4/30/2004 8:13:33 AM ET 2004-04-30T12:13:33

Citigroup has acquired a 97.5 percent stake in KorAm Bank, South Korea's sixth largest lender, for about $2.6 billion, the U.S. financial services giant said Friday.

The deal marks the largest foreign investment in South Korea's fragile financial sector, and the first takeover of a local bank by a foreign commercial lender.

Citigroup's attempt to buy KorAm began in February when it agreed to buy a 36.6 percent stake held by a consortium led by U.S.-based Carlyle Group and JP Morgan Corsair II.

At the time, Citigroup offered to buy all remaining shares. In a statement Friday, Citigroup said it has so far bought 97.5 percent of the South Korean bank for 3.07 trillion won.

KorAm Bank, established in 1983, has 43 trillion won ($36.8 billion) in assets and operates 222 branches.

The deal helps Citigroup's Citibank unit to expand its consumer banking business in South Korea. It could also boost KorAm's image as Citigroup has a good reputation in South Korea with a local branch posting strong returns in the past several years.

When the economy slowed and companies began collapsing during the 1997-98 Asian financial turmoil, South Korean banks were saddled with bad loans, triggering a sudden loss of international confidence.

South Korea vowed to reform its ailing banks by inviting foreign investment. Bank reform was a key condition for a $58 billion economic bailout package from the International Monetary Fund that helped the South Korean economy regain its feet.

Last October, Lone Star Funds, a Texas-based investment firm, bought a controlling stake in Korea Exchange Bank for about $1.2 billion.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com