Punjab National Bank will buy out the 58% stake held by two of its partners in a planned life insurance joint venture, which is still pending regulatory approval. PNB holds a 30% stake in the planned life insurance venture, called Principal PNB Life Insurance Company, in partnership with Mauritius-based Principal Financial Group (26% stake), domestic firm UK Paints (32%) and Vijaya Bank (12%).
The company never got narrow approval from IRDA due to differences between the partners. PNB will buy the entire 26% stake held by Mauritius-based Principal Financial Group in the life insurance company, as well as domestic firm UK Paints’ 32% participating interest, the bank learned the Bombay Stock Exchange. However, the other home partner Vijaya Bank would remain with the joint venture. Following the change in partnership, the name of the planned joint venture would also be changed, sources said. Post regulatory approval, the stake of PNB in the venture would go up to about 88% per cent.
The stake sale was formalised under a communication of Understanding inked between the JV partners for reform their existing joint ventures.
PNB and Vijaya Bank will settle on the future course of action in the insurance company after receiving regulatory approvals and finalisation of the deals, it said. At the same time, the Delhi-based public sector lender will also buy out Principal and Berger Paints stake of 26% per cent and 25% per cent respectively in a proposed insurance broking company, which also did not get off the position.
However, in the asset management joint venture with Principal, both PNB and Vijaya Bank will remain as partners for a period of 3 years. As part of the joint venture restructuring, it was also decided that PNB and Vijaya Bank will sell their 30% per cent and 5% per cent stake respectively in a projected joint venture distribution firm to Principal.
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