INSTANT VIEW: HSBC to buy 51 pct stake in Korea Exchange Bank

LONDON/SEOUL (Reuters) - HSBC (HSBA.L) (0005.HK), Europe's biggest bank, said on Monday it had agreed to buy a 51.02 percent stake in Korea Exchange Bank (KEB) (004940.KS), the sixth largest bank in Korea, for about $6.3 billion cash.

HSBC, which announced on August 20 it was in exclusive talks to buy the KEB stake from U.S. private equity fund Lone Star, said the acquisition would give it "a significant presence in Asia's third largest economy".

HSBC said it did not intend to make a tender offer to Korea Exchange Bank's remaining shareholders.

Following is a selection of comments from analysts:

SIMON WILLIS AT NCB STOCKBROKER

"The price that HSBC is paying for KEB is not particularly cheap but the element of scarcity value for a strategically important asset justifies the price in the longer term.

"There have been comments that hit the news wires suggesting regulators and the Korean government were certainly signaling this was not a done deal by any means. So you have to wait and see but HSBC is a proper bank and they stand a better chance to satisfy the regulators."

HAN JEONG-TAE, HANA DAETOO SECURITIES

"The offered price is very high. But the real key is whether the government will approve it.

"For domestic banks such as Kookmin, the deal is a strategic miss and they have to hurry up and change their strategies.

"For KEB shareholders, the announcement at this time may not be positive news because it will leave the bank exposed to the M&A news too long until regulators approve it."

KU YONG-UK, ANALYST, DAEWOO SECURITIES

"HSBC is showing a strong commitment to the Korean banking sector through this deal. It is saying it will buy first, and wait until the final ruling is made, no matter how long the process takes.

"HSBC is betting that, by holding such a large stake, it will convince the authorities of its fitness to officially become the majority shareholder when its review comes up.

"KEB will now have to deal with the absence of a majority shareholder, but that shouldn't necessarily be a big problem.

"This is difficult news for Korean banks such as Kookmin or Hana, as they tried so hard to make a deal last year. This was the only major acquisition available, and it has gone. Their only growth driver will have to be non-banking institutions."