July 6, 2017 / 6:10 AM / 2 years ago

Thai bank SCB halts $3 billion insurance unit sale as talks fail: sources

HONG KONG/SINGAPORE (Reuters) - Thailand’s Siam Commercial Bank (SCB) has put off a potential $3 billion sale of its insurance unit as talks with suitor FWD Group of Hong Kong failed on valuation disagreements, three people familiar with the matter said.

FILE PHOTO: People walk pass the logos of Siam Commercial Bank at an exhibition hall in Bangkok, Thailand, May 12, 2016. REUTERS/Athit Perawongmetha/File Photo

Insurer FWD, owned by tycoon Richard Li, the youngest son of Hong Kong’s richest man, Li Ka-shing, was in discussions with SCB, Thailand’s third-biggest lender, on the life insurance unit deal.

One of the people said that differences over using SCB’s vast branch network to sell insurance products after the completion of the deal was partly responsible for the stalemate between the two companies. The person declined to give details.

It was not immediately clear if the Thai bank will relaunch the sale. Both SCB and FWD declined to comment, while the sources declined to be named due to the sensitivity of the matter.

At $3 billion, the acquisition would have been the largest ever insurance M&A transaction in Southeast Asia, and the biggest in Asia since August 2016, according to Thomson Reuters data.

Insurers in Asia have been looking to expand the so-called bancassurance tie-ups - or leveraging bank branch networks for distribution - as opposed to the traditional agency model to tap into the region’s fast-growing insurance market.

The takeover of the unit would have helped FWD expand its existing wholly owned insurance business in Thailand, which started in 2012 and had total assets of about 74.7 billion baht ($2.2 billion) at the end of 2015.

The SCB unit, SCB Life Assurance, ranks among the top Thai insurers. It had net premium earnings of 48 billion baht and net profit of 5.8 billion in 2014, as per financials available on the SCB Life Assurance website.

Reuters had reported in January that Hong Kong-based AIA Group, Manulife Financial Corp, and Prudential Plc were among insurers weighing a bid for SCB’s unit.

SCB’s insurance business sale plan was one of several large Asia insurance M&A deals in the pipeline, which included a sale of Australia and New Zealand Banking’s life insurance and wealth business valued at more than $3 billion.

Reporting by Sumeet Chatterjee and Anshuman Daga; Additional reporting by Chayut Setboonsarng in BANGKOK; Editing by Muralikumar Anantharaman

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