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Punjab National Bank, the country’s second largest public sector bank, has set the ball rolling for sale of if its entire stake in Canara HSBC OBC Life Insurance (CHOICE) by inviting bids for the appointment of a legal advisor for the proposed transaction.
After the three way amalgamation with Oriental Bank of Commerce and United Bank of India from April 1 last year, PNB had become a promoter shareholder, with 23 per cent stake in CHOICE. Prior to this amalgamation, OBC held 23 per cent stake in CHOICE.
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Canara Bank has a 51 per cent stake and HSBC Insurance (Asia Pacific) Holdings has 26 per cent stake in the life insurer, which is now an associate company of PNB.
It maybe recalled that PNB had, in May this year, said that PNB will divest stake in CHOICE at an “appropriate time, depending on market conditions and available options.”
IRDAI norm
The plan to exit CHOICE is in keeping with the insurance regulator IRDAI’s norm that a commercial bank should not hold more than 10 per cent stake in two life insurance ventures at the same time.
Post the OBC amalgamation, PNB had significant shareholding in two life insurance ventures — PNB MetLife insurance (30 per cent stake) and Canara HSBC OBC Life (23 per cent stake).
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