Singapore's DBS Group Holdings, Southeast Asia's largest bank, said on Monday it has ended talks with Lone Star about buying a stake in South Korean lender Korea Exchange Bank.
The statement came after Korea's Yonhap news agency on Sunday quoted Lone Star chairman John Grayken as saying that the U.S. investment firm had stopped talks with DBS.
Grayken didn't say why the talks ended, but said that the Dallas-based fund would keep looking for a buyer for KEB, despite a legal battle over the 2003 purchase of the bank.
"We notified Lone Star that we would not be going forward due to the uncertainties in the market surrounding the local issues that have been going on for over a year," DBS said in a statement.
South Korean prosecutors said in December that the $1.2 billion acquisition was illegal because of flaws in the sale process.
Grayken said that DBS had approached Lone Star after talks for a $7.3 billion sale of KEB to top South Korean lender Kookmin Bank were terminated in November.
DBS -- in which state investor Temasek Holdings has a 28% stake -- has a stock market value of about $23 billion and is the biggest among the three Singapore banks by assets.