South Korean regulators are set to launch a probe into Hana Bank's 1.5 trillion won ($1.4 billion) loan to a unit of U.S. buyout fund Lone Star that holds a majority stake in Korea Exchange Bank <004940.KS>, an official said on Tuesday.

Hana Bank, a core unit of Hana Financial Group <086790.KS>, said on Friday that it would extend the loan to the U.S. buyout fund on the back of its controlling stake in KEB, as Hana's agreed $4.3 billion deal to buy KEB from Lone Star remains in limbo due to delays in regulatory approval.

The review will focus on whether the loan extension is in line with credit regulations and whether the bank's loan book will become too heavily skewed toward a specific asset after the deal, the official at the Financial Supervisory Service said.

Hana, which is still in talks to revive the beleaguered KEB deal, expects it to be extended for six months to December and aims to cut the acquisition price after KEB decided to pay a record quarterly dividend last week that netted Lone Star $499 million.

(Reporting by Ju-min Park and Lee Chang-ho; Editing by Jonathan Hopfner)

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