Allahabad Bank to divest Insurance business

Allahabad Bank's Board of Directors may go with partial or complete disinvestment of its stake in the insurance joint venture Universal Sompo General Insurance Company (USGIC). The bank's Board of Directors will meet on December 4,2015 to consider the divestment.

Allahabad Bank will consider the request for proposal (RFP) and will appoint a consultant for advising & redrafting of existing shareholders agreement with USGIC. The proposal is aligned with amended Indian Insurance Laws. Recently, the Indian government allowed the foreign investors to increase their stake in the Indian insurance joint ventures to 49 per cent from the earlier 26 per cent.

At present, the bank has 30 per cent shareholding stakes in Universal Sompo General Insurance Company. Other joint venture partners viz. Indian Overseas Bank (IOB) have holdings of 19 per cent and Karnataka Bank has a holding of 15 per cent. Dabur Investments has 10 per cent stake and Sompo has 26 per cent equity in the USGIC.

UGSI is a joint venture between Allahabad Bank, Karnataka Bank, Indian Overseas Bank and Dabur Investments form the Indian participation with the foreign partner Sompo Japan Insurance. The Word 'Sompo' in the company's name means 'property insurance' in Japanese. The company offers a wide range of financial services including life insurance, securities, asset management and venture capital businesses.

Allahabad Bank's shareholding pattern indicates that FII holdings contracted by 174 basis points to 5.22 per cent and DII holdings too contracted by 16 basis points to 18.92 per cent in September 2015 quarter. The share price of the bank increased by 2.21 per cent on bourses in early trades and is trading at Rs 77.25 on intraday basis.

Allahabad Bank operates in four segments such as Treasury Operations, Corporate / Wholesale Banking, Retail Banking and Other Banking business. The Bank's personal banking services include deposit products, other credit products, account portability, deceased depositors and All Ayushman Bima Yojana. Its corporate banking services include corporate credit, cash management services and gold card scheme for exporters. The Allahabad Bank's retail credit products include housing and furnishing loan, dream car loan, commercial vehicle finance scheme, trade loan, property loan, rent loan, home appliances finance scheme, education loan, Gyan Dipika Scheme, saral loan, gold loan and reverse mortgage scheme.