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Remya Nair

Mumbai, Oct. 7 The takeover of the banking and insurance group Fortis’ Belgium and Luxembourg assets by BNP Paribas is unlikely to affect their investments in Indian insurance companies.

While BNP Paribas Assurance, a subsidiary of BNP Paribas, holds a 26 per cent stake in SBI Life Insurance Company, Fortis has a 26 per cent stake in IDBI Fortis Life Insurance Company.

Post the €14.5-billion takeover of Fortis units by BNP Paribas, there is lack of clarity regarding the fate of their investments in the two Indian life insurance companies. At present, according to IRDA regulations, one foreign company cannot invest in more than one Indian life insurance company. The takeover would give BNP Paribas a stake in both IDBI Fortis Life Insurance and SBI Life Insurance.

“The takeover would lead to a conflict of interest and BNP Paribas would have to sell off its stake in one of the two Indian joint ventures,” said an IRDA member.

However, when contacted, company officials clarified that there would be no conflict of interest and the takeover would not lead to breaking IRDA rules regarding ownership as BNP Paribas has not taken over the international insurance business of Fortis.

Mr Pier-Paolo Dipaola, Deputy Chief Executive Officer, SBI Life Insurance Company, said in an e-mail response: “BNP Paribas has not taken over the international insurance activities of Fortis. Indian operations are not part of the transaction.”

“BNP Paribas has acquired Fortis Insurance in Belgium. The international insurance activities of Fortis are unaffected by the transaction,” said Mr G.V. Nageswara Rao, IDBI Fortis Life Insurance Company.

BNP Paribas had acquired all Fortis’ banking operations, excluding the Dutch operations, which were acquired by the Netherlands Government. This includes Fortis’ private banking, merchant banking, investment management and the consumer finance activities. It had also acquired Fortis’ insurance business in Belgium.

More Stories on : Mergers & Acquisitions | Insurance | Financial Markets

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