Hana Financial Group chairman Kim Seung-yu raised the possibility on Wednesday that the group’s preliminary deal with Lone Star Funds to trade shares of Korea Exchange Bank could fall apart.

If financial regulators do not finalize their stance on whether to approve or reject the Hana-Lone Star deal by the end of February, there is a high possibility that the U.S. fund will drop out of the contract, Kim told reporters.

Under the scenario, Lone Star may file a suit against financial regulators, he said.

His remarks could be interpreted as pressure on financial regulators to approve the deal as soon as possible, according to analysts.

The Financial Services Commission and the Financial Supervisory Service are probing the shareholder eligibility of Lone Star, as a prior step to endorse or reject the M&A application.

A group of lawmakers and civic groups say the Hana-Lone Star deal was originally invalid, arguing that “the equity fund has been a non-financial investor, which is barred from owning a Korean bank.”

Meanwhile, the nation’s chief regulator has pledged to revamp the overall systems of the financial industry this year.

In his New Year meeting with CEOs of financial companies, FSC chairman Kim Seok-dong said the financial sector suffered problems from key weak points last year.

Kim pointed to three weak points ― consumer protection, management structure and cyber security.

“Financial companies were negligent in basic sectors while they mostly pushed for efficiency.”

He said financial authorities will review problems and map out measures to enhance the key business sectors.

By Kim Yon-se (kys@heraldcorp.com)