KB Financial Group said on Friday it had signed a contract with LIG Insurance to take over a controlling stake in the country’s fourth-largest nonlife insurer.

The banking group reportedly paid about 640 billion won ($630 million) to buy a 19.83 percent stake in LIG Insurance.

‘‘The company has sought the deal to diversify its banking-centric business portfolios into the nonbanking business,” KB Financial said in a press release.

The stake acquisition still needs approval from the financial authorities before it can be finalized.

A KB Financial spokesman said it would soon discuss such postmerger measures as a change of corporate name, development of a computing system, and improvements and sales.

LIG Insurance was auctioned off in November 2013 as part of the insurer’s debt restructuring program. Five bidders, including KB Financial and Lotte Group, were in competition to win the deal.

KB Financial expects the acquisition of LIG Insurance will help the firm boost its competitiveness in the nonbanking business.

Industry watchers, however, showed mixed reactions, with some analysts saying the acquisition may have little impact on raising KB’s return on equity.

The deal is expected to boost the morale of employees of KB Financial, which has been publicly spotlighted for an internal feud among board members of Kookmin Bank over a plan to change its computer system. Kookmin Bank, a subsidiary of KB Financial, is the country’s biggest bank by assets.

By Suk Gee-hyun (monicasuk@heraldcorp.com)