KEB was partly privatized in 1989 through a so-called citizen share ownership plan, following which the government retained a 51-percent equity stake while the other 49 percent were distributed widely to the Korean citizenry,[1]: 161–162 and was then one of Korea's leading commercial banks.
In 2006, Lone Star tried to sell the company to the highest bidder, Kookmin Bank, but the plan was scrapped when it faced investigations by South Korean prosecutors and regulators.
In September 2007, HSBC agreed to purchase a controlling stake for $6 billion, but the sale was not approved by the South Korean government.
[9] Consequently, the president of KEB, Kang-won Lee sent a report that Korea Exchange Bank's BIS ratio was assessed as 6.16% as of July 25, 2003.
However, after the acquisition, as the stock price of Korea Exchange Bank rose, Lone Star got about $1 billion of appraisal profit within 3 months.
In June 2006, the Board concluded that the BIS ratio of 6.16% was assessed as unreasonably low under the unrealistically pessimistic scenario.
[19] Eventually, on February 9, 2012, Lone Star Funds were forced to sell the KEB to Hana Financial Group due to the guilty verdict from the Korea Exchange Bank Credit Service stock manipulation case.
On November 22, 2012, Lone Star brought arbitration against South Korea before the International Center for Settlement of Investment Disputes (ICSID).