Vijaya Bank May Enter Four- Bank Insurance Tieup

Sources close to the talks said that while BoI, PNB and Allahabad Bank had finalised their alliance, the hunt for the fourth partner had been narrowed down to Corporation bank and Vijaya bank. "However Corporation bank has its own plans as far as the insurance sector is concerned so it is most likely that Vijaya bank will be the fourth partner."

While the foreign partner will take 26 per cent, the other four banks are likely to take varying stakes in the new venture. "It is unlikely that the all the banks will take equal stakes. While three of the banks may certainly do so, a fourth partner may take a higher stake."

 

With their network of corporate and retail clients and depositors, the four banks are strongly placed to gain business, said the sources.

The foreign partner is yet to be selected by the consortium, said the sources, adding that presentations had been made and the partner would finalised soon.

The collective net owned funds of the four banks is over Rs 6,100 crore. While that of Bank of Baroda is Rs 2,898 crore, PNB's is Rs 1,930 crore, Allahabad Bank's is Rs 849 crore and that of Vijaya bank is Rs 447 crore.

The RBI guidelines allow banks to enter the insurance sector with equity contributions of up to 50 per cent. Stakes of more than 50 per cent will be allowed only on a selective basis and with conditions relating to divestment of those stakes below 50 per cent.