Lender holds 48 pc stake in IDBI Federal Life Insurance Company
MUMBAI: Now that LIC has completed the acquisition of 51 per cent controlling stake in the beleaguered IDBI Bank, the latter has once again decided to initiate the divestment of its stake in the three-way joint venture – IDBI Federal Life Insurance Company.
“In continuation of IDBI Bank’s earlier disclosure dated February 21, 2017, we hereby advise that the board of directors of IDBI Bank at its meeting held on Monday, January 21, 2019 has approved in-principle, the proposal to reinitiate divestment process of IDBI stake in IDBI Federal Life Insurance Company Ltd,” the IDBI Bank statement said.
IDBI Bank is the largest shareholder in the life insurance outfit with 48 per cent stake, the remaining being equally shared between Kerala’s leading lender Federal Bank and the Belgian life insurer Ageas at 26 per cent each.
IDBI Bank had mooted the idea to divest its stake in the life insurance company some time back as a measure to raise funds for the bank that has been battered by the huge bad loans it has accumulated over years, ultimately sending the bank into prompt Corrective Action (PCA) regime.
The plan was part of a broader scheme to boost the bank’s capital by selling non-core assets much before the idea of LIC increasing its ownership in IDBI Bank to a controlling stake occurred later.
Earlier on Monday, IDBI Bank in a stock exchange filing hailed the LIC’s move to buy majority stake in the bank as a win-win situation for both IDBI Bank and LIC with an opportunity to create enormous value for shareholders, customers and employees of both entities through mutual synergies.
Though the plan to sell its 48 per cent stake in the insurance company was revived a few months back, IDBI Bank management decided to keep it on hold until the LIC deal was through, and now the decks are cleared for the same
“We started the sale process in the insurance joint venture, but then the LIC deal occurred. We will take a decision on IDBI Federal Life Insurance in consultation with LIC once it completes its investment,” Rakesh Sharma, Chief Executive Officer and Managing Director of IDBI Bank had said at the press conference convened to discuss results.
Earlier in 2018, when IDBI Bank had put its life insurance stake on the block, Max Life Insurance and Aditya Birla Sun Life were said to have evinced interest in the acquisition of the shares though the deal failed to go through then.