Linklaters has advised JP Morgan and Barclays Capital (joint lead managers) on the first hybrid Tier 1 capital issue by a Korean bank. The issue is also reported to be the world's first non-investment grade rated hybrid Tier 1 issue (FinanceAsia).

The Korean Financial Supervisory Commission issued guidelines for hybrid Tier 1 capital a few days before the preliminary Offering Circular was printed.

The offering was valued at US$200 million and comprised 99 year subordinated notes (with an automatic rollover) by Hana Bank to Hana Funding Limited which purchased the subordinated notes with the proceeds from the offering of Tier One Preferred Securities.

"We are seeing a significant increase in the amount of regulatory capital raising in Asia," notes lead partner Andrew Malcolm. "This year we have worked on the first upper Tier 2 issue in Hong Kong, the first Tier 2 issue in Indonesia, and the first lower Tier 2 issue in the Philippines, as well as this landmark deal in Korea. Regulators have been raising the bar for bank capital since the Asian financial crisis, and increasing pressure on banks around the region with the current downturn should bring further activity in this area."

The team acting on the deal included lawyers based in Hong Kong, London, Paris and Amsterdam, as well as Linklaters' joint venture partner Allen & Gledhill in Singapore.

Capital markets partner Andrew Malcolm led the team, assisted by Sang Lee (US law), Christine Lo, Matthew Furner and Dicky Tsang (Hong Kong). Capital markets partner Alan Stevens and associate Darren Levene also worked on the deal acting for the trustee.

Other parties working on the deal included Kim & Chang as Korean counsel to the joint lead managers, Lee & Ko as Korean counsel to the Issuer and Guarantor and Maples and Calder as Cayman Islands counsel to the Issuer.