Franklin Templeton is pursuing to hand over its investment trust management operation to a Korean rival, Kiwoom Asset Management Co., to exit from Korea, industry sources said Thursday.

Franklin Templeton Investment Trust Management under the U.S.-based investment firm last year sought merger with Samsung Active Asset Management but gave up the plan after the company incurred huge losses on funds for bank loans extended to low-credit American companies. It received punitive actions from local financial authority for violation of disclosure rules for the losses.

Franklin Templeton has been studying other options since then and is reportedly in serious talks with Kiwoom Asset Management about a possible merger, according to sources.

“Kiwoom initially was interested in just the fund assets under Franklin Templeton, but currently is conducting due diligence for a takeover of the entire Seoul office upon request,” said a source close to the matter. “Templeton is seeking to exit from the Korean market after selling off its local entity to Kiwoom and keep presence in the country through a liaison office.”

Kiwoom said nothing has been decided yet but did not deny talks were in progress. It added that Kiwoom may favorably consider if it has access to Templeton’s overseas assets after the acquisition.

Founded in 1997 as the first foreign investment unit, Franklin Templeton Investment Trust Management has 1.8 trillion won ($1.53 billion) assets under management. Kiwoom is the industry’s No. 8 in Korea with assets over 55 trillion won under management which has been expanding its investment portfolio such as to alternative assets.

By Jin Young-tae and Lee Ha-yeon

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