Punjab National Bank (PNB),
India’s largest state-owned bank, has set its sights on playing a
significantly larger role in the country’s insurance industry than
it has up to now.
Among a number of moves in
this direction is an invitation it has extended to local and
international companies to submit interest in partnerships, with
the aim to establish a venture in India’s life and general
insurance markets. PNB has appointed US consultancy Boston
Consulting Group to support its direct foray into insurance
business.
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PNB already has a number of
bancassurance partners in India, including the country’s largest
life insurer, state-owned Life Insurance Corporation of India; and
Indian general insurer, state-owned Oriental Insurance.
In another insurance-related
move, PNB announced in early-January that it had completed the
restructuring of its joint venture with Principal Financial Group
of Mauritius (PFG Mauritius) and Vijaya Bank.
Under the restructuring,
bought PFG Mauritius’ 26% and Indian company Berger Paints’ 32%
stake in Indian insurer Principal PNB Life Insurance Company. This
increased PNB’s stake in Principal PNB Life from 30% to 88% stake
with the balance of 12% held by another state-owned Indian bank,
Vijaya Bank.
PNB paid a total of about
$270,000 to PFG Mauritius and Berger Paints for their stakes in
Principal PNB Life, which was incorporated in 2005, but has yet to
commence business. PFG Mauritius is a wholly-owned subsidiary of US
insurer Principal Financial Group.
In addition, PNB acquired PFG
Mauritius’ 26% stake and Berger Paints’ 26% stake in Insurance
Broking Company, taking its total stake in the Indian insurance
broking firm to 82%.
For the last part of the
restructuring, PNB sold its 30% stake in an Indian mutual fund
joint venture with Principal to PFG Mauritius. PNB said this would
enabled it to distribute the mutual fund products of other
parties.
Established in 1894, PNB has more than 60m customers and
operates some 5,000 branches in almost 800 cities and towns. About
3000 branches are in rural and semi-urban area. In its financial
year to 31 March 2010, PNB reported revenue of $5.6bn, net income
of $882m and total assets of $67.4bn.
