Many lenders are moving into emerging markets

US-based Citigroup edged out Standard Chartered, which has a 10% stake in the South Korean lender.

Many lenders are moving into so-called developing markets as demand is expected to increase and growth rates are higher than in the US and Europe.

Citigroup already has operations in countries such as Poland and Mexico.

Top of list

"Korea is a strategic priority for Citigroup," said Deryck Maughan, chairman and chief executive of Citigroup.

The purchase of Koram Bank will put Citigroup ahead of rivals Standard Chartered and HSBC in South Korea, which is Asia's fourth-largest economy and its third-biggest banking market.

Citigroup offered 15,000 won (�6.83, $12.71) for each Koram Bank share, about 7% more than the average price over the past month.

The bid was high enough to convince a consortium led by the Carlyle Group, the private investment concern, to sell its 37% stake.

Early effects

Citigroup said it hoped to secure more than 80% of Koram, including Standard Chartered's holding.

Although the boards of both lenders have agreed the deal and will recommend it to shareholders, the purchase agreement still needs regulatory approval.

Both banks, however, said they were confident that the deal would go through in the second quarter of this year.

Koram Bank has more than 6 million clients and 222 domestic branches. Together with Citigroup, the companies will form South Korea's fifth-largest bank.

Hank Morris of Industrial Research Consultants in Seoul told the BBC's World Business report that the acquisition could shake up the country's banking industry.