Punjab National Bank’s (PNB) Board on Tuesday approved the initiation of process for divesting 10 percent shareholding in its associate company Canara HSBC Life Insurance through an initial public offering (IPO) route. Currently, PNB holds 23 percent stake in Canara HSBC Life Insurance.
“The Board in its meeting held today, i.e., 04.06.2024 has accorded its approval for initiating the process of diluting 10 percent stake of the Bank in Canara HSBC Life Insurance Company, an associate company of the bank, by listing the company in Stock Exchanges (BSE/NSE) through Initial Public Offer (IPO). The same shall be subject to regulatory approvals”, said a PNB filing with the stock exchanges on Tuesday.
This latest PNB move comes on the heels of the Board of Canara Bank last Friday giving its approval for initiating the process of diluting 14.50 per cent stake in its subsidiary Canara HSBC Life Insurance. Currently, Canara Bank has a 51 percent stake in the life insurer, while HSBC has a 26 percent stake in the joint venture.
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For the year ended March 31, 2024, Canara HSBC Life had reported a surplus of ₹ 182 crore, up 15 percent over the surplus of ₹ 158 crore recorded in previous fiscal.
Canara HSBC Oriental Bank of Commerce Life Insurance had in 2022 rebranded and renamed itself to Canara HSBC Life Insurance. Canara Bank is also proposing to divest part of its holding in its mutual fund business Canara Robeco Mutual Fund through IPO route.
It maybe recalled that PNB Managing Director and CEO Atul Kumar Goel had last July said that the bank had no immediate plans to sell the stake in Canara HSBC Life. He had then highlighted that insurance regulator IRDAI had changed its norms and allowed a bank to hold equity stake in two life insurers — PNB MetLife (30 percent) and as an investor in Canara HSBC Life up to 25 per cent.
Earlier, IRDAI norm required PNB to bring down holding in one of its life insurance companies to 10 percent. It was earlier stipulated that a bank cannot be a promoter of two life insurers and should bring holding to 10 percent in one of them. However, this norm had been changed and IRDAI had permitted a bank to move from promoter category to investment category even if the holding is up to 25 per cent.
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