The board of KB Financial Group Inc., South Korea's No. 2 banking group, turned down a company plan to take over the local life insurance unit of ING Group on Tuesday, dealing a blow to the group's push for business expansion.

   "The board came to the conclusion that it's in our best interest to maintain financial soundness as a leading industry player and service the needs of our customers and smaller businesses when the market faces difficulties like household debts and the eurozone debt crisis," it said in a statement.

   KB Financial has been trying to win board approval since it was selected as the preferred bidder for ING Life Korea in September but failed to receive the nod due to strong opposition from some outside directors.

   The board put the matter to a vote later in the day and five out of 12 directors disapproved of the takeover with two others abstaining, the company said. It needed consent from at least seven board members.

   The takeover deal is estimated to be lower than the earlier bidding price of some 2.4 trillion won ($2.2 billion), but it has been recently reported that the company has cut it down to 2.2 trillion won to earn the board's approval.

   The stymied takeover deal came less than two weeks after the board failed to reach an agreement at a meeting on Dec. 18.

   Some members of the board expressed opposition to the group's push for the takeover, saying that it can undermine the overall profitability of the financial firm given that the current economic climate continues to remain sluggish.

   The takeover plan has been ambitiously pushed by Euh Yoon-dae, the chairman of KB financial, who is known as a staunch supporter of a so-called mega-sized bank.

   KB Financial has been ramping up efforts to buy the life insurer in a bid to beef up its non-banking business. The group has decided not to bid for Woori Finance Holdings Co. apparently out of political pressure.

   A successful takeover of ING Life Korea would enable KB Financial to raise its insurance subsidiary to the No. 5 industry player if the group combines ING Life Korea with its minor insurance unit, KB Life Insurance Co.

   Unionized workers of ING Life Korea, meanwhile, reversed their initial opposition and gave a green light last week to acquiring the Korean arm of the global insurance giant, after waging a labor strike for almost three months to demand job guarantees after KB Financial's potential acquisition. (Yonhap News)