SBI to divest 10% in life insurance venture

State Bank of India (SBI) on Tuesday said it received board approval to divest up to 10 per cent of its stake in SBI Life Insurance.

SBI Life is a 74-26 joint venture between SBI and BNP Cardif, with the former holding 74 per cent and 26 per cent by the foreign partner.

After the Insurance Bill was passed by Parliament, many public sector insurers have put their plans on fast track.

V Kannan, managing director, associates and subsidiaries, SBI, earlier said many investors had shown an interest in taking a stake in the bank’s insurance ventures.

Last week, SBI said it would be reducing stake in its general insurance venture from the present 76 per cent to 51 per cent. There would be a corresponding rise in the stake of Insurance Australia Group from 26 per cent to 49 per cent. A valuer would be appointed to facilitate price discovery.

The state-owned lender said after the new law in this regard, raising the cap on foreign direct investment in the sector to 49 per cent, the executive committee of the central board for the partners decided, on Wednesday, to initiate the necessary action. This was in line with their joint venture agreement, for dilution of SBI's stake when it was legally allowed.

SBI Chairman Arundhati Bhattacharya during a conference call after the third quarter results in mid-February had said that they are planning to divest part of its stake in its life and general insurance ventures. She had said that both domestic and international investors have shown interest in picking up stake in the life and general insurance ventures, and that the joint venture partners in these ventures also want to hike their stake.

She had also said the bank was not planning to list the insurance ventures for at least the next six months. SBI holds 74 per cent stake in the life and general insurance ventures, while the joint venture partners hold 26 per cent.

SBI General Insurance is a joint venture between SBI and Insurance Australia Group. SBI Life Insurance is a joint venture between SBI and BNP Paribas Cardif.

State Bank of India