KDB will acquire HSBC's 11 Korean branches, including assets and debt, the Seoul-based bank said yesterday, without giving the value of the deal.

It plans to conduct due diligence on the 11 branches and complete the purchase as soon as possible, it said.

Kang Man Soo, KDB's chairman and a former South Korean finance minister, is planning an initial public offering by the end of this year as part of President Lee Myung Bak's 2007 election pledge to sell the state-owned lender and make it globally competitive.

HSBC, Europe's largest bank by market value, has been selling assets including units in Japan and Thailand to focus on bigger markets.

"KDB needs to expand its loan book for retail, commercial banking businesses through all possible ways," said Lee Byung Gun, an analyst at Seoul- based Dongbu Securities.

"This acquisition is definitely part of KDB's effort to meet that task, but the bank still has a long way to go."

KDB's domestic branch network will rise to 76 after the HSBC deal. The Korean bank plans to expand local branches to 135 by next year, it said.

The group's flagship Korea Development Bank unit posted profit of 1.4 trillion won (HK$9.5 billion) last year, a 32 percent jump from 2010, according to its website.

In contrast, net income at HSBC's South Korean business fell 27 percent to 213.5 billion won last year from a year earlier, according to its website.

It employed 844 staff in Korea as of December 31, the data show.

London-based HSBC, which plans to cut 30,000 jobs by the end of next year, is selling assets as the euro-area debt crisis saps profit and regulators demand thicker capital buffers. BLOOMBERG