SEOUL, June 11 South Korea's KB Financial Group Inc has been chosen as the preferred bidder to buy 20 percent of LIG Insurance after submitting an offer of about 600 billion won ($590 million), a source working on the deal said.
The stake would make KB, South Korea's largest bank by assets, the biggest shareholder in the country's fourth largest general insurer and give it effective control.
The source declined to be identified as he is not authorised to speak to the media. A KB spokesman confirmed the company has been selected as preferred bidder and said it had been given a two-week period of exclusive talks, but declined to provide further details.
The stake was put up for sale to reimburse investors who lost money on faulty debt issued by a now-defunct construction affiliate of LIG Group.
KB, which had 297.8 trillion in assets as of end-March, has been looking to diversify its banking-centric business portfolio.
Shares in LIG Insurance jumped 7.9 percent in Wednesday trade, compared to a 0.1 percent rise for the wider market.
An LIG spokesman referred queries to sell-side advisor Goldman Sachs which declined comment. ($1 = 1016.2000 South Korean Won) (Reporting by Joyce Lee; Editing by Edwina Gibbs)