Thailand's Thanachart Bank readies sale of insurance ops: sources

HONG KONG Fri Mar 16, 2012 2:42am EDT

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HONG KONG (Reuters) - Thailand's Thanachart Bank Pcl, backed by Canada's Bank of Nova Scotia (BNS.TO), is preparing to sell its insurance operations in a deal could fetch about $500 million, sources familiar with the matter said on Friday.

The sale would likely include a bancassurance deal and could kick off in the next two weeks, one of the sources said. Citigroup Inc (C.N) had been hired to run the sale, several sources said.

Another source familiar with the deal said the sale was being driven by stricter regulatory capital reserve requirements and the goal was to complete the sale in the next quarter. The source said domestic and foreign companies, including Japanese firms, were among potential buyers. A separate source confirmed that there was interest from Japanese insurers.

The sources declined to be identified because the information is not public. A Citigroup spokesman declined to comment.

In an e-mailed statement on Thursday, investor relations officials at parent Thanachart Capital Pcl (TCAP.BK) said Thanachart Bank had not yet decided whether to sell, keep or merge its Thanachart Life Assurance and Siam City Life Assurance businesses.

Thanachart Bank executives told analysts on February 28 the bank was not selling its insurance business, the investor relations officials said, but added that Thanachart Bank would be open to such a deal.

Local Thai media quoted Thanachart Bank's chief executive, Somjate Moosirilert, as saying late last month that Thanachart's insurance operations could be merged or sold, but the tax implications needed to be studied and no decisions had been made.

Some local media reports said Citi was advising on strategic options and that Southeast Insurance Group of TCC Group was a potential buyer.

Banks selling insurance assets and setting up distribution agreements as part of those sales is not a new phenomenon. CIMB Group in Malaysia in 2007 sold insurance assets and struck bancassurance deals with Allianz and Aviva. Singapore-based United Overseas Bank sold its life insurance unit to Britain's Prudential in 2010 for $307 million and entered into a 12-year bancassurance agreement.

Just last week, HSBC sold its general insurance business, along with 10-year bancassurance agreements, to AXA and QBE.

Thanachart Bank is Thailand's fifth-largest lender by number of branches and the country's biggest car loan lender.

The Bangkok-based bank is jointly owned by Thanachart Capital Public Co Ltd and Scotia Netherlands Holding BV, with Thanachart Capital owning slightly more than half of Thanachart Bank. Thanachart Bank bought Siam City Bank over the course of several transactions in 2010.

Thanachart Bank sells life, health, fire, auto, marine and transportation insurance. According to Thailand's Office of the Insurance Commission, Thanachart's life insurance business had premiums of 7.1 billion baht ($230.63 million) in 2011. It was ranked No.10 out of 24 life insurers in Thailand by premiums in 2011 and had a market share of 2.17 percent.

Thanachart Bank's non-life insurance business had premiums of 4.6 billion baht over the same period. It was ranked No.8 of 66 non-life insurers in Thailand and had a market share of 3.32 percent.

As of December 31, Thanachart Bank's life insurance business had total assets of 34.9 billion baht and the non-life insurance business had total assets of 8.7 billion baht. The bank's total assets across all business lines was 886 billion baht.

($1 = 30.7850 Thai baht)

(Reporting by Clare Baldwin, Denny Thomas, Lawrence White and Kelvin Soh in HONG KONG and Khettiya Jittapong and Manuphattr Dhanananphorn in BANGKOK; Editing by Chris Lewis and Matt Driskill)

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