Hana Financial Group’s shares were weighed down by a growing uncertainty surrounding its planned acquisition of Korea Exchange Bank from U.S. Lone Star Funds.

As the possibility that financial regulators will delay the finalization of whether to approve the takeover emerges, the financial group saw its stock price fall for the fourth consecutive trading session.

According to the Korea Exchange, Hana Financial’s stock price continued to drop since March 9 to close at 44,000 won on Monday, down 8.8 percent compared to 48,250 won on March 8.

Investors’ heavier selling for the nation’s fourth largest financial group could mainly be attributable to the Supreme Court’s Thursday ruling on the former Korean unit of Lone Star.

The court hinted that former CEO of Lone Star Korea could be implicated in stock manipulation of the now-defunct KEB Credit Card, which was later merged into its affiliate KEB with a massive manpower restructuring in 2004.

The ruling seemingly embarrassed the Financial Services Commission, which had planned to convene a panel meeting to allegedly endorse the Hana-KEB deal on March 16.

The issue is whether the financial authority will push ahead with the finalization of its review on the deal as scheduled.

If the FSC gives the nod to the deal despite the court’s ruling, the regulator could face severe criticism amid the worsening public sentiment toward the U.S. buyout fund Lone Star.

Another long-standing issue, which could be a hurdle for the takeover, is Lone Star’s eligibility as the largest shareholder of the Korean bank.

Regarding the issue of whether Lone Star had been eligible to purchase more than 50 percent of KEB stake, the FSC had also planned to finalize it in connection with the M&A approval review process.

The FSC was ordered by courts in January and in September 2009 to publicize the documents which it has been examining to determine Lone Star’s eligibility for KEB control since 2007.

But it rejected the order and appealed with the highest court.

Korean law bans industrial capital from taking more than 9 percent of a bank. A firm is categorized as industrial capital when its non-financial assets exceed 2 trillion won or its holdings of non-financial concerns account for at least 25 percent of its total capital.

The FSC began the review in 2007 after civic groups raised the possibility that the U.S. private equity fund could be industrial capital.

Last Thursday, the Supreme Court overturned a lower court decision that found Yoo Hoe-won, former head of Lone Star Korea, not guilty in the case of the Korean unit of the U.S. fund manipulating the stock price of KEB Credit Card.

The case has been sent back to the Seoul High Court for retrial.

By Kim Yon-se (kys@heraldcorp.com)