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According to the Chosun Daily, the nation's fourth-largest Hana Financial Group Inc., which on Monday announced that it was giving a thought on a rights offer, is considered to be preparing for an M&A bid.
"As part of our capital plan, we are considering a rights offer in a range that won't damage the total shareholder value," Hana said in a regulatory filing.
Local observers expect that the amount of rights offering may reach up to 2 trillion won (1.7 billion U.S. dollars), the media said.
Hana's capital adequacy ratio and tier-1 capital ratio posted 12.1 percent and 8.1 percent, respectively, as of end-June, standing far above the level recommended by the nation's financial watchdog, which suggested the offers may not be related to improvement in the bank's capital sound, according to the media.
With the money raised from the offer, Hana is likely to pursue financing an acquisition of a bank or a financial group, it said, adding that Hana didn't either accept or reject the speculation.
With two major sales looming in the market, one being the long- drawn sale of Korea Exchange Bank (KEB) by U.S. private equity firm Lone Star and the government's push for stake scale-down in Woori Financial Group, Hana is thought to be interested in one of the transactions, Chosun said, introducing two scenarios prevalent in the market.
If Hana settles the deal with Woori, whose 23-percent stake may be out in the market, Hana may take the top position in the banking sector with total assets of 451 trillion won (383 billion U.S. dollars).
Otherwise, Hana, hand-in-hand with the nation's top KB Financial Group, may push for a trilateral M&A with purchase of the KEB from Lone Star, for which state-run Korea Development Bank and Nonghyup are also known to show interests.
Either way, Hana may rise to the top position of the financial market, which would lead to a new line-up in the nation's financial sector, Chosun said.
The Seoul stock market, however, did not favor Hana's announcement, with its stock prices plunging 14.4 percent on Monday.
"It may have worried investors that an M&A without adequate communication with the market may bring about a plunge in the shareholder value," a local analyst was quoted as saying.
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