SEOUL, Dec. 24 (Yonhap) -- Korea Exchange Bank (KEB) began taking steps Tuesday to spin off its credit card business, in a move to relocate the unit under the wing of its new parent firm, the bank said.
The board of South Korea's fifth-largest lender agreed at a meeting earlier in the day to separate its credit card division and set up a new company, which will be merged with Hana SK Card Co., an affiliate of No. 3 banking firm Hana Financial Group, KEB said.
"The spinoff is (for KEB) to boost competitiveness such as reducing cost overlaps and building more bargaining power through the merger with Hana SK Card," the bank said in a statement.
The merger is part of the takeover process between KEB and Hana Financial since its acquisition of KEB in February 2012.
The banking group bought a 51.02 percent stake, worth 4.7 trillion won (US$4.42 billion) in the lender from U.S. buyout firm Lone Star Funds, KEB's major shareholder at the time.
The merger is expected to raise the market share of Hana SK Card to 7.6 percent from 4.5 percent tallied as of end-September, given the 3.1 percent held by KEB.
KEB's card division has an equity capital of 640 billion won, with 2.81 trillion won in assets.
Since the takeover, KEB and Hana Financial have been in talks about merging their card businesses with a deadline of March 31, 2014 under their agreement.
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