British bank Standard Chartered has trumped bigger rival HSBC by agreeing to buy Korea First Bank for $3.3 billion in cash.
StanChart will finance the acquisition, the biggest single foreign investment in South Korea, via a $1.88 billion share placing to expand in Asia's third-biggest economy.
The deal includes buying a controlling 48.6 per cent stake in Korea First Bank, South Korea's eighth-biggest lender, held by US private equity fund Newbridge Capital, and the remainder held by South Korean government bodies.
Newbridge bought its stake for $472 million in 1999 and has more than tripled its investment.
StanChart, which makes about two-thirds of its profits in Asia, has wanted to expand in Korea, which has a fast-growing wealth management market and a consumer debt market that is recovering from a soured credit boom.
Korea First will represent about 22 per cent of StanChart's assets post acquisition, making it StanChart's second-largest presence by assets after Hong Kong.