KB set to take over ING Life Korea

Two sides reach ‘virtual’ settlement over terms of price: source


KB Financial Group will soon take over the Korean insurance unit of ING Group, with the two sides having almost settled pending issues, financial sources in Seoul said on Friday.

Negotiations between KB Financial, the nation’s second largest financial group and the sole contender in the bid for the Netherlands-based insurance group’s Korean arm, are in the final phase and they will soon conclude the deal, according to the sources involved in the matter.

The two sides had been at odds over the takeover price as ING Group reportedly demanded about 3 trillion won to 3.5 trillion won while KB Financial offered about 2.6 trillion won.

News reports said ING Group seems to give in much as it is in a hurry to pay back the Dutch government for a 3 billion euro recession-era loan as well as carry on its restructuring plan to separate its banking and insurance divisions.

A KB Financial spokesperson said that there is a possibility that ING Group will not select KB Financial as the preferred bidder. Instead, the group is expected to hand over the Korean unit through direct negotiations with KB Financial to quicken the conclusion.

ING Life Korea is the fourth-largest life insurance firm in the country by market share, and is worth around 3.5 trillion won.

The deal includes the sale of KB Life Insurance shares owned by ING Group to KB Financial Group. KB Life Insurance ranks near the bottom in the life insurance market. KB Financial Group currently owns a 51 percent share of the insurer and ING Group 49 percent.

Analysts said that if KB Financial were to take over ING’s Korean arm, the lender would be able to use its 1,160 local branches to handle ING Life’s non-banking businesses such as bancassurance.

In that case, KB’s insurance sector would be among the “Big 4” in the market along with Samsung Life Insurance, Korea Life Insurance and Kyobo Life Insurance.

Analysts also forecast that KB Financial Group’s competence would see a boost, supported by three stable sectors ― bank, card and insurer.

Banking sources said KB Financial seems determined to strengthen its competitiveness by merging with an insurance company, rather than seeking a takeover of a financial group.

By Park Min-young  (claire@heraldcorp.com)