HSBC will be withdrawing from the Korean retail structure products market following a possible deal to sell off its retail units to the nation's biggest state-owned banking group.
Korean Development Bank Financial Group (KDB) said on Monday it will be taking over HSBC's eleven branches, including assets and debt. It did not disclose the value of the deal.
KDB is said to be in the market to expand its loan book for retail and commercial banking businesses.
HSBC has recently been offloading assets, including its Japan and Thailand units, while it redirects its regional focus.
A spokeswoman confirmed the bank was in talks but declined to comment further.
A sale brings to an end a five-year tenure in the Korean retail structure products market, where the UK lender never went beyond simply testing the waters.
Since its first offer in late 2007, HSBC has issued only five products, one of which is still live, and due to mature in July.
In comparison, the KDB Group has 2,046 live products on the SRP database.
KDB saw its profits jump by nearly a third for 2011 with $1.2bn, while annual net income for HSBC's South Korean unit fell by more than a quarter to $187m in 2012.
The acquisition will expand KDB's points of sales to 76 retail locations. The bank plans to have 135 local branches by 2013.
KDB is also planning an initial public offering by the end of the year to make it more competitive internationally and to fulfil one of President Lee Myung Bak's 2007 election pledges.