(Adds estimated value of deal, analyst comment, shares)
AMSTERDAM Oct 2 Dutch insurer Delta Lloyd
said it will sell its Belgian banking operations, which
analysts estimate to be worth about 300 million euros ($406
million), so it can build up its Belgian life insurance and
Delta Lloyd Bank Belgium had total assets of 6.9 billion
euros at the end of 2012 and reported first-half net income of
12.4 million euros. The proposed sale of the bank - which has
570 employees, about 171,000 customers, and a network of 55
branches - came as a welcome surprise.
"We see this decision as part of a strategic process to
create a sustainable Belgian life and pension franchise with a
focus on capital efficiency," ING analyst Albert Ploegh said in
a research note.
"We expect further add-on transactions in coming years to
strengthen its position. The Belgian bank was a fully fledged
activity but in our view the scale was too small to be
sustainable over the long-term."
Last month, Delta Lloyd said it had agreed to acquire the
Belgium-based insurer ZA Verzekeringen NV, which specialises in
term life insurance and which has annual gross written premiums
of about 50 million euros, as it wants to become a leading
player in the Belgian market.
Delta Lloyd said the proposed sale would not affect the use
of the bank's network as a distribution channel for its pension
and life insurance products in Belgium, as it intends to have a
long-term distribution agreement between Delta Lloyd Life and
Matthias De Wit, analyst at KBC Securities, put the bank's
book value at 300 million euros, adding he assumed the sale
would go ahead at a discount - at 0.7 times the book value, or
about 200 million euros.
"This is a logical move, as it will free up a significant
amount of capital and give it a better buffer against a
difficult market backdrop," De Wit said.
Delta Lloyd has appointed Moelis & Company as financial
adviser on the sale, but did not put a value on the bank.
Analysts said there were no obvious buyers for the business,
and that a private equity deal would be likely to attract more
scrutiny from the regulator than another industry peer.
Delta Lloyd shares were down 0.58 percent at 15.465 euros at
(Reporting by Sara Webb; Editing by Mark Potter and Louise