HSBC poised to sell Korea retail unit to KDB HSBC is in the final stages of talks to sell its retail banking unit in South Korea to KDB Financial Group as the UK lender retreats from unprofitable operations as part of a global overhaul. Kang Man-soo, KDB Financial chairman, on Thursday confirmed that discussions were under way. He told reporters the talks were "progressing well" and should be concluded "soon," but declined to give any details. HSBC declined to comment. The sale is part of a strategic shift by HSBC to concentrate on commercial and wholesale banking while curtailing retail operations to markets in which it can achieve profitable scale. Stuart Gulliver, HSBC's chief executive, in May said the bank would focus on a few key markets to reinvent itself as a corporate bank. It has already withdrawn from high streets in Russia, Poland and Chile and has pulled back in the US. HSBC last month offloaded its private banking business in Japan to Credit Suisse, and is understood to have struck a deal to sell its Thai credit card and retail units. The UK lender has struggled to compete with local rivals in the retail sector in South Korea, where it has only 11 branches with assets totalling Won30tn ($26bn). In comparison, KDB, a relatively minor player in the retail segment, has about 60 branches. A deal would help KDB Financial expand its deposit base before a planned privatisation. "It would help us secure more branches and staff," said another executive at the bank. Analysts said it was hard to estimate the value of the deal, citing difficulties in obtaining data for HSBC's retail operations in Korea. But they were generally positive about the plan. "It will be a win-win for both sides as HSBC is hardly making money from its retail business here while KDB wants to expand its assets," said Han Jung-tae at Hana Daetoo Securities. KDB Financial, traditionally strong in corporate banking, has long been seeking to branch into the retail sector to enhance its corporate value ahead of a government stake sale, which by law must begin by 2014. Seoul has said it plans to sell a stake in KDB this year. Lee Myung-bak, South Korea's president since 2008, said as his main election promise that he would reduce state ownership as part of efforts to bolster the banking sector. Mr Kang, a former South Korea finance minister and a strong proponent of a South Korea "megabank," is keen to expand KDB via acquisitions. Our banks are too small relative to our country's economic size. So it is difficult for them to compete on the global stage," he said. He said KDB would actively seek foreign acquisitions, anticipating that many foreign banks are likely to be looking to unload assets amid Europe's debt crisis and the global economic slowdown. However, KDB last year tried to buy state-run Woori Financial but was forced to drop its bid due to strong public opposition. Many investors were worried the formation of a giant state bank could hurt Seoul's commitment to boosting the competitiveness of the banking sector. Mr Kang said KDB Financial would step up plans to float on the domestic market as part of government efforts to privatise the lender. "We will prepare to complete an initial public offering this year," he said, aiming to to sell at least a 10 per cent stake regardless of market conditions.