News

LIC may enter banking space; eyes majority stake in IDBI Bank

Insurance behemoth LIC is looking to enter the banking space by acquiring majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lenders stressed balance sheet, sources said.
As the government makes efforts to revive the fortunes of IDBI Bank, which is saddled with huge amounts of bad loans, LIC becoming a major stakeholder in the lender could be beneficial for both state-owned financial players in the long run, they added.
While a final decision is yet to emerge on whether LIC would be snapping up over 50 per cent stake in IDBI Bank, official sources said the preliminary contours of such a plan is being worked out.
A possible scenario would be the insurance major making IDBI Bank as a subsidiary on the line of its housing finance and mutual fund businesses. According to the sources, there would be business synergies in case the LIC-IDBI Bank deal materialises.

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Is a possible stake sale to LIC the best solution to IDBI problems?

IDBI Bank shares surged Friday as the market cheered the possibility of LIC acquiring a piece of the bank. But, is it a cause for celebration or concern? Unlike other state-owned banks, the government had an opportunity to privatize IDBI Bank as it is not covered by the bank nationalization laws, and there is no legal restriction on the government to trim its stake below 51 percent. Had it done so, the government could have sent a strong signal about its intent to fix the problems of the banking sector. Transferring a part of its stake to LIC is an ad-hoc interim solution and shows the governments reluctance to cede control.

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LIC market pie continues to slip,down 200 bps to 44% in FY18

Private life insurers continued to yank down the market share of the national life insurer LIC, which fell by two notches to 44 percent in the just-concluded fiscal year 2018, while the formers increased to 56 percent from 54.
Another surprise in the year was the SBI Life toppling the market leader ICICI Prudential Life in market share sweepstake in the year. This is the third consecutive year of faster premium growth for the arm of the nations largest lender clipping at 31 percent, according to the data collated by Wall Street brokerage Morgan Stanley today.
There was more surprises in the year: the largest three private life players - SBI Life, ICICI Pru and HDFC Life - enjoy as much as 57 percent of the market share of the private sector that has close to two dozen players.
The composition within the private sector is much different: the top three bank-backed insurers - SBI Life, ICICI Prudential and HDFC Life - now make up 56 percent of the private sector market share against 39 percent in FY09, the brokerage said.

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Government may exit Air India, sell its residual stake to LIC

The Centre may completely exit from Air India and sell its residual stake to Life Insurance Corporation of India (LIC) and other financial institutions of the country, according to a report by Business Standard.
The government is planning to sell 76 per cent of equity in the national carrier, 50 per cent stake in ground handling and hospitality firm AISATS and 100 per cent stake in its subsidiary Air India Express.
The move could also help address investors concerns over the possibility of the governments interference in the airlines operations after its sale.
The government is about to begin discussions with LIC and other state-owned insurance companies to sell its residual stake in the flag carrier after employee stock ownership plans (ESOPs) are meted out to permanent employees, the report suggests. Moneycontrol couldnt independently verify the report.

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