The banking giant may be third time lucky, with a bid of US$3b to buy 49pc of the country's eighth-largest lender HSBC is poised to pay debt work-out specialist Newbridge Capital up to US$3 billion for its 49 per cent stake in Korea First Bank (KFB), analysts say. Should the deal be concluded, it would be third time lucky for HSBC, which has twice before baulked at the asking price for a controlling stake in South Korea's eighth-largest commercial bank. It will also represent a coup for Newbridge, which paid the Korean government just US$417 million for the stake in 1999 after the bank was rescued from collapse and nationalised in the wake of the Asian financial crisis. News that a deal was close to being wrapped up appeared in the Korea Economic Daily yesterday. In the Reuters reports that followed, Kim Kyo-shik, secretary-general of the Public Fund Oversight Committee - the body that approves sales of government stakes - told the news service he had been informed about the negotiations between the two parties from the Korea Deposit Insurance Corp, the government agency that owns a 48.49 per cent stake in the bank. An HSBC spokesman yesterday said the group had no comment and Shan Weijian, the managing director of Newbridge in Hong Kong, did not return calls. Adding force to the reports, however, were comments to Seoul newspapers earlier this month from HSBC's Hong Kong chairman, David Eldon, who said the group had plans to expand its market share in Korea to rival the presence already established there by Citibank. Mr Eldon was in the city for a meeting of the Seoul International Business Advisory Council, which he chairs. In February, Citigroup said it had agreed to pay the Carlyle Group and JP Morgan Corsair 3.18 trillion won ($22.26 billion) for the consortium's 36.6 per cent stake in KorAm Bank. Ahead of that deal, Citibank reported Korean assets of 11.3 trillion won. With assets of 43 trillion won, KorAm ranked sixth among the country's commercial banks at the time of the deal and the combined businesses of the two parties created the largest financial business in Korea, Citigroup said. Should the KFB deal go ahead, HSBC would close the gap opened by its global rival. KFB was reported earlier this year to have assets of 44 trillion won and when last reported, HSBC's Korean assets totalled 8.5 trillion won, which ranked it the second-largest foreign bank in Korea, behind Citigroup. 'Newbridge acquired the KFB stake at a time that HSBC was talking to Seoul Bank. Recall that ultimately HSBC and the Korean government couldn't come to an agreement, owing to differences over asset quality and valuation,' a London-based bank analyst said yesterday. HSBC had tried to acquire a stake in KFB in 1998 before Newbridge beat it to the punch. It then negotiated fruitlessly with Newbridge for the stake early last year. 'Since then, HSBC had been fairly dismissive about South Korea until a few months ago, when it adopted a far more conciliatory tone,' the London analyst said. 'It would be no surprise to hear a deal is on - and bear in mind this particular deal has been rumoured several times before.' Market speculation of a price tag ranging between US$2.7 billion and US$3 billion indicated a price-asset ratio of about 7 per cent to 8 per cent, which was a little richer than the 6 per cent ratio at which the country's listed banks traded, the analyst said. 'That may be somewhat higher than listed banks but looked at from a franchise expansion point of view, it does not look bad at all,' the analyst said. 'Also, when you look at KFB as a sub-optimised franchise, it is exactly the sort of deal that HSBC has executed most successfully, specialising as it does in acquiring under-utilised assets that are then re-engineered.' HSBC could meet the price tag from internal resources and no capital-raising would be necessary, he said.