SEOUL--ING Groep N.V. (ING) will seek to raise nearly $1 billion by selling both its stake in South Korean banking giant KB Financial Group (105560.SE) and its stake in the two companies' life-insurance joint venture, steps that would end a partnership that had lasted for more than 13 years, people familiar with the matters said Thursday.
ING's moves come two months after Seoul-based KB Financial Group, citing macroeconomic risk after months of exclusive talks, decided against buying ING's Korean life insurance company, ING Life Insurance, for $2.1 billion.
The collapse of that deal was a blow to ING, which is required to sell more than half of its Asian operations and at least a quarter of its U.S. insurance business by the end of 2013 under the terms of a 2008 Dutch government bailout.
A term sheet showed Thursday that ING Bank N.V.--ING Groep's banking arm and the second-largest shareholder in KB Financial--will seek to raise up to $676 million by selling its 5% stake, or 19.4 million shares, in KB Financial.
The shares will be sold in after-hour block trades after the market's close Thursday at KRW37,480-KRW37,750 each, a discount of 0.7%-1.4% to their closing price of KRW38,000 Thursday.
In addition, ING is seeking to sell its stake in KB Life Insurance, its life-insurance joint venture with KB Financial, to KB Financial, which would then have complete ownership, a person with direct knowledge of the matter told The Wall Street Journal on Thursday.
"ING has been in talks with KB Financial for months to sell its 49% stake in KB Life to KB Financial," the person said. "The talks haven't been successful yet due to conflict over price, but it's a matter of time for the deal to be struck."
ING's stake in KB Life Insurance has a book value of around $277 million, the person said.
ING's relationship with KB Financial dates to 1999, when the Dutch company bought a nearly 10% stake in Housing & Commercial Bank, which was later purchase by Kookmin Bank, which later became a holding company of KB Financial through a share swap.
ING has resumed efforts to sell ING Life Insurance, and Korean companies including Hanwha Life Insurance (088350.SE) and unlisted Kyobo Life Insurance--the nation's second- and third-largest life insurers--have shown interest, people with knowledge of the matter said last week.