Shareholders of Hana Financial Group Inc. and its affiliate Korea Exchange Bank approved Friday the group's move to take full control of KEB through swapping shares, bank officials said.

At an annual meeting, shareholders of Hana Financial voted for the share swap plan with 98.34 percent approval, the group said. It will raise its stake in KEB to 100 percent from the current 60 percent by swapping each of its shares for 5.28 KEB shares.

KEB shareholders, in contrast, passed the plan after three hours of heated discussion during a meeting, due to strong opposition from unionized workers at KEB and some minority shareholders. The KEB union staged a protest in front of the hall, but there were no physical altercations.

Hana Financial's move got a boost as the Bank of Korea, the second-largest shareholder of KEB, decided to exercise its right to request Hana Financial to buy its 6.12 percent KEB stake.

The consent on the share swap and the BOK's decision paved the way for South Korea's No. 3 banking group to gain full control of KEB, after acquiring it from U.S. buyout fund Lone Star Funds for 4.69 trillion won (US$4.23 billion) in early 2012.

With the BOK's decision, KEB will be suspended from trading on the Seoul bourse as of April 3, before it gets delisted on the 26th of the same month. Shares of Hana Financial closed down 0.89 percent at 39,000 won on the main bourse on Friday. KEB shares lost 1.08 percent to 7,310 won.

The BOK was in a quandary over whether to exercise its appraisal rights as the current share prices of KEB have hovered well below the initial value of capital it injected in the lender when KEB was established as a state-run bank in 1967.

Market watchers had raised concerns that if the central bank exercised its right to request the group to buy shares, the BOK should sell its holdings by some 30 percent below its purchase prices, incurring losses.

But the BOK said it cannot keep its KEB stake any longer as local law forbids the central bank to hold stakes in private financial institutions, and spurned concerns over possible losses, because they will be offset by the dividends it has received from the KEB for the past few years.

Hana Financial earlier said that it would buy shares from Hana Financial and KEB stakeholders who oppose the group's move at pre-determined prices. The plan would have been nullified if the volume of requested share buying surpasses 10.9 percent of Hana Financial's outstanding shares and 21 percent of KEB's stocks, or a total value that exceeds 1 trillion won.

Unionized workers at KEB have opposed the group's share swap plan, saying that the move was in clear violation of the agreement, which stipulates that Hana Financial may begin talks with the KEB union on a possible merger process five years after the takeover.

Last year, Hana Financial and the KEB union made the post-takeover agreement, under which Hana Financial will run KEB as an independent entity and maintain its current brand and wage system until at least 2017. (Yonhap News)