Federal Bank to raise stake in life insurance ‘associate’

 

Bank likely to increase stake in IFLIC up to 30 pc

KOCHI: Federal Bank, the largest lender from Kerala, is planning to raise its stake in IDBI Federal Life Insurance Company Ltd (IFLIC) from the present 26 per cent up to 30 per cent.

The board of the Alwaye-headquartered bank has already proposed a plan to buy up to 4 per cent stake from IDBI Bank, the largest shareholder in the insurance company with 48 per cent, subject to price finalization and all relevant regulatory approvals, a filing made to the stock markets on Monday said.

Apart from IDBI Bank and Federal Bank, there is a third shareholder currently in the said insurance company, the Belgian multinational insurance company, Ageas Insurance, which owns the remaining 26 per cent.

The move gains significance at a time when IDBI Bank, has already made its plan public to dilute its stake in the insurance outfit down to 21-25 after the life insurance major, LIC of India, bought a controlling stake in the bank a few months ago in order to give a leg-up to the bank that has been grappling with huge bad loans.

IFLIC has an asset base of Rs9226 crore and a turnover of Rs151 crore as per the latest available annual financials – FY2019.

Federal Bank said in its filing that the details of the transaction – including whether it would be cash consideration or share swap, are yet to be decided.

About two weeks back, IDBI Bank had said it might retain 21-25 per cent stake in IFLIC contrary to reports that talked about stories including about the bank’s alleged plan to sell off the whole stake in the insurance company that was incorporated in January 2007.

The idea to dilute IDBI Bank’s stake in IFLIC has been necessitated by the entry of Life Insurance Corporation (LIC) of India as the 51 per cent shareholder in the bank in a well-thought out move to save the bank that was mired in a sticky bad loan menace.

LIC bought a majority stake in IDBI Bank in January 2020 and the bank also started using its network to sell LIC products as was obviously expected as fallout of the deal.

 

 

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