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HSBC, the UK's biggest bank, has confirmed that it has agreed to buy a 51 per cent stake in Korea's sixth-largest lender.

In a statement today HSBC said it would pay US private equity firm Lone Star around $6.3 billion (£3.1 billion) in cash for the stake in the Korea Exchange Bank (KEB).

However the purchase price will increase by $133 million (£66 million) if the deal is not completed by January 31st 2008, HSBC stressed.

The bank said that the acquisition deal is subject to a number of conditions, including the requirement for HSBC to obtain the relevant regulatory approvals from the Korean authorities.

Under the agreement made between HSBC and Lone Star, KEB will remain listed on the Korea stock exchange.

Meanwhile HSBC has stressed that it does not intend to make an offer to KEB's remaining shareholders.

The bank says that the acquisition of over half of KEB's stock mirrored its stated strategy of targeting investment at high growth markets and would enhance its position in the Asia-Pacific region.

"Our stated strategy is to focus on expanding HSBC's presence in important growth economies, particularly in Asia, Latin America and the Middle East and to maintain our capital strength to allow us to take advantage of strategic opportunities," said HSBC group chairman Stephen Green.

"This prospective acquisition reflects that strategy," he added, claiming that the deal would provide HSBC with a "significant presence" in Asia's third largest economy.

HSBC said that if Korean regulators approve the deal, it intends to keep the KEB name. However the bank said it might consider adding a reference to the fact that the Korean bank was part of the HSBC group if its plans to become KEB's majority shareholder are approved.