Korea Exchange Bank the main bank involved in Hynix Semiconductor's investment tangle, is about to see its majority stake sold to U.S. investment fund Lone Star before the end of this week.

The deal is expected to be worth about $1.2 billion and would make the Texas-based fund the second foreign investor to take control of a South Korean bank, the report said.

Lone Star is expected to add about  $855 million (1 trillion South Korean won) in new capital to KEB to help it battle bad loan decisions and pay an additional sum for existing shares -- some of which are held by Commerzbank of Germany -- for a 51 percent stake.

KEB is 43 percent owned by the government through stakes held by state-owned institutions, FT said. That would be reduced following the investment by Lone Star.

Should all go as planned, Commerzbank's stake would also fall from its current 33 percent to less than 20 percent, according to the report.