HSBC, which has been linked to a range of deals to pick up distressed US banks, has today found itself with even deeper pockets after today walking away from it its long-running $6 billion (£3.29 billion) pursuit of Korea Exchange Bank.

The bank had argued that the global financial crisis made KEB less valuable but current owner Lone Star refused to budge on price.

HSBC said the plan to buy the fund's 51% stake was no longer in shareholders' interests. It was its second failed takeover of a Korean lender in three years.

The deal has been mired in legal and regulatory disputes for a year. As one of the world's best-capitalised and most profitable banks, HSBC is considered a possible buyer of a range of lenders on the market because of the current meltdown.

It has been named as a possible buyer of Morgan Stanley and for US building society Washington Mutual. Insiders deny it has any interest in Morgan, but WaMu could be a better fit.

HSBC was the first major global lender to admit losses from exposure to the toxic subprime lending market, with a £10.6 billion bad-debt charge last year.

It revealed a record $17.2 billion in bad debts in March, but has largely contained the impact of the subprime crisis since then.

The withdrawal from the Korean deal is an anti-climax after more than a year of trying to push it past the regulator. Korea has been unlucky for HSBC. Standard Chartered trumped its bid to buy Korea First Bank in January 2005 while Citigroup acquired Koram Bank in 2004.

Lone Star and its South Korea chief Paul Yoo have won appeals against their convictions for manipulating the stock price of a Korea Exchange Bank unit to buy the affiliate cheaply, and Seoul regulators recently indicated that they were keen to speed the deal through.