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HSBC's stake sale in Canara HSBC OBC Life Insurance Company may not happen due to current market situation, according to a senior official from Canara Bank. It may be noted the Rs 60,000 crore Shriram Group, Canada's Manu life and others have shown interest to buy HSBC's stake in the insurance venture.
“There will not be any stake acquisition by anybody in the insurance firm now. HSBC is reviewing their idea to sell their stake. The time is not good, so they may not be selling. A final decision on this would be there hopefully in next 10-15 days,” said R K Dubey, chairman and managing director, Canara Bank.
He was speaking to Business Standard on the sidelines of FICCI meet on emerging paradigms in south India.
Both HSBC and Shriram Group spokesperson were not available for comment. However a senior official from the Shriram Group said that “we have shown our interest, they did not revert to that and it has put in abeyance”.
Earlier the Group representatives have said that Acquiring stake in Canara HSBC OBC Life Insurance would be a good bet for Shriram Group to open the bancassurance channel. The two public sector Banks together owns around 6,000 branches across the country, which will be a major route to grow the business. The Group see value in the number of branches.
Industry sources says for 26 per cent stake HSBC has been quoting around Rs 1,000 crore, which may not be realistic at this point of time.
According to Reuters, Canada’s Manulife Financial Corp was also in race for HSBC’s stake in the JV. Valuing the life insurance firm at $800 million (around Rs 4,000 crore), the HSBC stake could be worth about $200 million (approximately Rs 1,000 crore), the agency said.
Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited, was launched in 2008 and is a Joint Venture between Canara Bank (holding 51%), HSBC Insurance (Asia Pacific) Ltd (holding 26%), the Asian insurance arm of one of the world's largest banking and financial services groups - HSBC and Oriental Bank of Commerce (holding 23%).
Canara HSBC OBC Life Insurance’s first-year premium collection fell 23.3 per cent in the April-February period to Rs 436 crore, whereas private-sector life insurers saw a dip of 5.5 per cent. The Indian life insurance industry saw its new premium collections falling six per cent in the first 11 months of 2012-13.
The Company operates a bancassurance model and it has an exclusive access to around 60 million customers and a network of over 6000 bank branches of its corporate agents, according to information available in the company's website.
