Bank Negara Indonesia (BNI), a government-backed lender, is exploring options including selling its stake in its life insurance arm, Bloomberg has reported citing unnamed sources. 

The lender has held initial talks with advisers for the divesture of its 60% stake in BNI Life Insurance, they said. 

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If BNI reaches an agreement, the deal could value the life insurer at around $1bn. The transaction could also include a bancassurance agreement, they added.

Separately, Japanese firm Sumitomo Life Insurance, which also owns a stake in BNI Life Insurance, is reviewing its stake, the sources told the publication. 

Sumitomo Life Insurance acquired around a 40% stake in the Indonesian peer in 2014 in a deal valued at $354m. 

Notably, Indonesian insurers have expressed preliminary interest in acquiring part or the entire stake in BNI. 

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As per the annual report, BNI had around IDR22.8 trillion in assets at the end of 2021 and it posted a net income of IDR180bn ($12m) that year.

The talks are at an initial stage and a formal sale process is not expected to begin until later this year, the sources said adding that the parties could still decide to not proceed with the transaction. 

Responding to the publication query, BNI corporate secretary Mucharom said that the firm continues to evaluate all its activities including its main business as well as its units. Until now, there is no plan to exit the life insurance business. 

The Japanese insurer’s representative said that before it could decide, the firm would like to check the Indonesian bank’s plans.