Netherlands-based financial conglomerate ING has inked an agreement with Seoul-based private equity firm MBK Partners, to divest its South Korean insurance business, in a transaction valued at nearly KRW1.84trn (€1.24bn).

Following the completion of sale, which is expected to close during the fourth quarter of 2013, the Dutch insurer will own an indirect stake of about 10% in ING Life Korea, valued at KRW120bn (€80m).

Besides, ING has also inked a licensing agreement that will allow ING Life Korea to continue to operate under the same brand for a maximum period of five years.

ING Group CEO Jan Hommen said that the transaction is a major step in the divestment of its Asian insurance and investment management activities.

"I am convinced that with the support of MBK Partners, ING Life Korea will continue to grow its customer offering and build on its position as the fifth-largest insurance company in the Korean market," Hommen added.

"Through its 10% stake, ING will be able to benefit from that growth potential."

The Amsterdam-based financial organization, which will sustain a €950m losses on the current transaction, said in May that three firms have shown interest to acquire the insurance operation, for which ING launched the sale process 17 months ago.

The three bidders include Kyobo Life Insurance Co, MBK Partners and Vogo Fund, which manages Tongyang Life Insurance Co.

During the financial crisis of 2008, the bank received a state bailout package and agreed with the Dutch government to divest all of its Asian insurance businesses.

Founded in 1987, ING Life Korea serves approximately 1.3 million customers, more than 1,000 staff and nearly 6,800 tied agents.