PNB to divest 23% stake in Canara HSBC OBC Life Insurance; buyer HSBC’s share to become 49%

Punjab National Bank (PNB) will be divesting its 23 per cent holding in its life insurance arm Canara HSBC OBC Life Insurance. The company will be selling its stake to HSBC Insurance.

After this, the share of HSBC Insurance in Canara HSBC OBC Life Insurance will go up to 49 per cent.  

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It became necessary for Oriental Bank of Commerce (OBC) to sell its share in the insurance business after being merged to PNB. This is because as per the rules of the Insurance Regulatory and Development Authority of India (IRDAI) any commercial bank must not hold more than 10 per cent share in two life insurance companies simultaneously.

After the mergers of the two banks, PNB had stakes in two life insurance companies - 30 per cent stake in PNB Metlife Insurance  and 23 per cent stake in Canara HSBC OBC Life.

In order to comply with the IRDAI rules, it was mandatory for PNB to sell its stake in Canara HSBC OBC Life.  

In Canara HSBC OBC Life, Canara Bank has holding of 51 per cent while HSBC Insurance (Asia Pacific) Holdings has 26 per cent stake.

After buying PNB’s stake, the share of HSBC Insurance in Canara HSBC OBC Life Insurance will go up to 49 per cent.