By Kim Jae-kyoung
Staff Reporter

Citibank was named as the prime bidder to take over KorAm Bank, the nation’s seventh largest lender, thwarting a bid by Britain-based Standard Chartered Bank (SCB).

The U.S. banking giant’s acquisition of the Korean commercial lender is expected to trigger a significant change in landscape of the domestic banking industry and financial market.

According to government sources, Carlyle Group picked the U.S. bank as the prime bidder ahead of a meeting of KorAm’s board of directors scheduled for March.

Citibank was approved to acquire the controlling 36.6 percent stake Carlyle holds in KorAm. In addition, Citibank plans to acquire the 9.76 percent stake SCB held in KorAm, a source close to the deal said. This would enable the bank to take over KorAm’s managerial rights.

But KorAm and Citibank executives in Korea said they are not in a position to verify the news. Korean regulators also said they have not received any formal report from any source on the deal.

``Nothing is confirmed. If it is confirmed, we will announce the result through a public offering,’’ said KorAm Bank president Ha Yung-ku.

The world’s largest lender will reportedly pay more than 3 trillion won ($2.6 billion), or around 17,000 won per share for KorAm’s stock shares, given the current price of approximately 15,000 won and management premium.

``Citibank seeks to run the Korean bank as a local branch, not a subsidiary,’’ another source added. This would mean that KorAm Bank would be de-listed off the Korea Stock Exchange.

Citibank made inroads into the domestic market in 1967, and has 12 branches in Seoul, Pusan, and Pundang, with total assets of 11.2 trillion won and 1,100 employees.

KorAm has 55.8 trillion won in total assets at the end of 2003, with 2,976 employees and 225 branch offices nationwide.

The official announcement is expected to be made as early as on Saturday in the U.S., and the formal contract will probably be made in May.

Citibank’s acquisition would be the first time for a foreign bank to make a strategic purchase of a domestic bank. Previously, overseas private equity funds like Lone Star, Newbridge Capital and Carlyle, have taken over banks in Korea.

Financial Supervisory Service Chairman Lee Jung-jae said on Friday that the government has neither the right nor the plan to regulate mergers and acquisitions of local financial services companies.

kjk@koreatimes.co.kr