Korea Exchange Bank(KEB), which was in financial difficulty, was provided with capital in 1998 by Komerz Bank of Germany, and then, in 2003, acquired by Loan Star Fund, an US-based private equity fund. The acquisition deal was revealed later as very controversial and was nullified. In this case, we examine the contents and process of acquisition deal, the managerial strategies and plans undertaken by Lone Star Fund, and the comparison between pre-versus post-acquisition performance of KEB. This case is expected to provide interesting issues related with foreign acquisitions of Korean banks and implications for government policies regarding bank M&A, bank management, and acquisitions of foreign banks by domestic fund.