Fortis and Industrial Development Bank of India Limited (IDBI) in exclusive negotiations to create a Life insurance Joint Venture in India
Mumbai / Brussels / Utrecht, 7 March 2006, Fortis and IDBI announced that they have signed a Memorandum of Understanding (MoU) with a view to setting up a Joint Venture in the field of Life Insurance. A third partner is to be jointly identified, which would bring with it the strength of increased distribution capacity, retail client base, and to satisfy structural requirements as per India’s statutory and regulatory framework.
Peer van Harten, CEO of Fortis Insurance International, comments: ‘It comes as no surprise that India has been clearly defined as a key market for the development of Fortis’s international insurance activities. With the insurance sector mushrooming in a country which is characterized by a high savings culture and low penetration rates, this MoU is a first but important step to enter this market. This will also give us the opportunity to profit from expected high growth in life insurance and possibly other related products and services such as Non-Life, Pensions and Asset Management. We look forward to our partnership with IDBI, a dynamic bank in India having built a strong network of corporate relationships, retail branches, ATMs and direct sales teams, as well as being close to Fortis in terms of corporate culture’.
Shri V.P. Shetty, Chairman and Managing Director of IDBI, added: ‘IDBI has decided to make a foray into Life Insurance business to complement the range of financial products and services being offered to its clientele in consonance with its vision statement to be a financial conglomerate. Fortis, one of the largest player in the insurance market in Europe and also having successful JVs in different Asian countries, has been chosen as a partner after a careful process of due diligence. Fortis will bring with it its unique experience in developing and operating the bancassurance model which will augment the activities of IDBI. Signing of this MoU is a significant step towards commencement of life insurance business. IDBI and Fortis will jointly approach the regulators for obtaining necessary statutory and regulatory approvals. Possibilities of synergistic and deepening business relationship with Fortis in other areas including non-life insurance, asset-management, pension, as also correspondent banking could be explored at an appropriate time in future.’
The signing of the MoU will have no immediate impact on Fortis’s solvency or net earnings per share. IDBI is a scheduled bank incorporated and registered under the Companies Act, 1956 having its registered office at Mumbai, India. IDBI enjoys status as a public financial institution. IDBI is also categorized under a new sub-group “Other Public Sector Banks”. The Government of India holds 52.68% of the issued capital of IDBI. IDBI was established as a wholly owned subsidiary of RBI to provide credit and other facilities for the development of industry. In 1976, the shares held by RBI were transferred to the Central Government and IDBI was entrusted with the additional responsibility of acting as a principal development financial institution responsible for coordinating the activities of institutions engaged in the financing, promotion or development of industry. IDBI has a long-standing business relationship with more than 3,000 corporate clients and over five million retail investors. IDBI has a network of 162 branches, 8 extension counters, and 371 ATMs. IDBI provides a wide range of products and services in the financial sector to both retail and corporate clientele. The range of diversified services includes amongst others project financing, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services, legal and technical advisory services, etc. to its corporate clients, as well as mortgage loan and personal loan to its retail clients. As part of IDBI’s development activities, IDBI has been instrumental in sponsoring and supporting key institutions involved in the Indian financial sector. IDBI has played a key role in formation of Securities Exchange Board of India. IDBI sponsored National Stock Exchange of India Limited, which first introduced electronic trading in securities in India. IDBI maintains arms length business relationship with its subsidiaries and affiliates. More information is available on www.idbi.com and www.idbibank.com.
Fortis is an international financial services provider engaged in banking and insurance. We offer our personal, business and institutional customers a comprehensive package of products and services through our own channels, in collaboration with intermediaries and through other distribution partners. With a market capitalisation of EUR 39 billion (28/02/2006), Fortis ranks among the twenty largest financial institutions in Europe. Our sound solvency position, our presence in 44 countries and our dedicated, professional workforce of 57,000 enable us to combine global strength with local flexibility and provide our clients with optimum support. More information is available on www.fortis.com
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