The Hindu Business Line : ING Vysya Bank divests stake in insurance venture

A press release issued by ING Vysya Life Insurance Company said that the stake sale was made for a consideration of Rs 60.9 crore. The sale would have to be approved by the regulator, the Insurance Regulatory and Development Authority. The release gave no other details.

With this change, ING Vysya Bank would be completely divesting holding in favour of GACL. This stake sale is expected to boost the first quarter bottomline of ING Vysya Bank that had ended the last financial year with a net loss of Rs 38.18 crore.

The sale would, however, not impact the existing shareholding structure of the ING Vysya Life. The ING group of the Netherlands is the largest stakeholder in the insurance company currently capitalised at Rs 345 crore. The ING group holds 26 per cent of the stake. The other major stakeholders in the insurance company are GMR Vasavi group and Enam Financial.

The ING group along with other private sector insurance players, it may be recalled, have for sometime been seeking an increase in foreign direct investment threshold beyond the current level. FDI, in life and general insurance business, is currently capped at 26 per cent. Foreign investors want this ceiling to be enhanced to 74 per cent to enable them to capitalise their respective joint ventures in the country. This was also partly because the domestic joint venture partners were finding it difficult to meet the large capitalisation requirement of the insurance business, to sustain the high growth. ING Life, for instance, has grown its premium base by over 300 per cent in the last financial year.

The stake sale is unlikely to impact the bancassurance arrangements with the ING Vysya Bank.

This was in view of the ING group's majority stake in the bank. The statement said that the life insurance company's products would continue to be distributed through ING Vysya Bank's 400-plus branches across the country on an exclusive basis. The bank's focus on strengthening its retail distribution will also benefit the distribution of ING Vysya Life products. The bank's extensive rural branch network will also continue to support the development of ING Vysya Life's rural business.

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