South Korea's financial regulatory body has given the green light for Hana Financial Group to merge its two main bank units, paving the way for the creation of the country's largest lending institute in terms of assets.

According to the announcement on Wednesday, Hana Financial Group, which is the country's third-biggest banking group, has been planning to merge Hana Bank and Korea Exchange Bank (KEB) since it acquired KEB from a US buyout fund in 2012, AFP reported.

The green light shown by the country’s Financial Services Commission came after shareholders and KEB's labour union agreed on the proposed merger.

The union had first opposed the deal, demanding Hana Financial deliver on its promise to run KEB as an independent entity for five years. However, the union changed its mind last week after receiving promises that the merger will keep jobs intact.

The banking group has also promised to help the consolidated bank, which will be launched in September, expand its presence in the global banking industry.

Hana Bank is a renowned institution in in private banking while KEB is famous for its foreign exchange operations. When together, they will have 945 branches operating in 24 countries with their combined assets totaling 290 trillion won (USD 256 billion).