HSBC has walked away from its $6 billion (£3.3 billion) deal to buy 51 per cent of Korea Exchange Bank, citing plummeting global asset values, the bank said today.

The credit crisis delivered the death blow to a foray into South Korea that has foundered since April, when the South Korean financial regulator withheld approval for the deal.

The acquisition of the stake from Lone Star, an American buyout fund, was criticised by conservatives in South Korea opposed to foreign ownership of large corporations.

Sandy Flockhart, HSBC’s chief executive for Asia, said: “In the light of developments around the world, not least changes in asset values in world markets, we do not believe that it would be in the best interests of shareholders to continue to pursue this acquisition on the terms negotiated last year.”

The Financial Services Commission, the South Korean watchdog, said it was “regrettable” that HSBC “unilaterally scrapped the deal” while it was being considered for approval.

HSBC has been under pressure from Knight Vinke, the activist shareholder, to accelerate its exposure to Asian markets, but Mr Flockhart insisted it is still keen to acquire a significant foothold in the Korean market, where its rivals Standard Chartered and Citigroup are already established.

He said: “HSBC remains fully committed to Korea…and it is our aim to play a full part in the country’s financial services sector. Our focus is now on HSBC’s existing and growing operations in Korea, which we will continue to invest in and develop.”

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