Canara, Oriental, HSBC Ins ink MoU for Life Insurance

New Delhi, Mar 5: A Memorandum of Understanding (MoU) for setting up a joint venture company in life insurance was signed here today betwen HSBC Insurance (Asia-Pacific) Holdings Ltd, Canara Bank and Oriental Bank of Commerce (OBC).

Under the proposed agreement, Canara Bank will take a 51 per cent stake in the new company, HSBC a 26 per cent interest and OBC the remaining 23 per cent.

The new entity will be capitalised at Rs 325 crore, of which HSBC will contribute Rs 177 crore, Canara Bank Rs 102 crore and OBC Rs 46 crore.

The signing ceremony took place in the presence of Finance Minister P Chidambaram and Minister of State for Finance Pawan Kumar Bansal.

The MoU was descibed as "non-binding", which Mr Chidambaram explained meant following up action on the agreement signed and completion of other requirements, including seeking of regulatory approvals.

Mr Chidambaram said this would be the 13th joint venture company in the Insuance sector and will have exclusive access to the customer bases of the state-owned banks, Canara Bank and OBC, and of HSBC in India. This comprises more than 40 million people and a nation-wide network of 3,600 branches.

Under terms of the agreement, HSBC will provide a range of management services, which may include providing executives for senior roles.

Chief Executive Officer, HSBC Mr David I Fried said the expectation is that the company will become operational in a period of 12 months.

UNI