BoR contract to provide a raise to insurance arms of ICICI

ICICI Bank’s proposed acquisition of Bank ofEarlier the insurance firm, which had partnered
Rajasthan will expand the distribution reach of ICICICenturion Bank of Punjab, lost a big chunk of
Prudential Life Insurance and ICICI Lombard Generalbusiness after the HDFC Bank-CBoP merger.
Insurance — subsidiary of ICICI Bank.“Bank of Rajasthan’s distribution capabilities
Shares of ICICI Bank fell by 7% per cent onare no where close to that of the erstwhile CBoP
Wednesday, as investors nervous that the bank hadand it is unlikely that Aviva will be affected,” said
overpaid for acquiring Bank of Rajasthan. On Monday,an industry official.
the bank had indicated an exchange ratio whichFor ICICI Bank, however, BoR provides a significant
reflected an 89% premium on Bank ofdistribution opportunity. The old generation private
Rajasthan’s market price. Bank ofbank has close to 500 branches and a large number
Rajasthan’s price rose 20% to Rs 119.of savings accounts. “Going by what happened in
Bank of Rajasthan presently distributes insuranceBank of Madura (another old generation private banks
products for Aviva Life Insurance and United Indiaacquired by ICICI Bank), I expect that BoR will be
Insurance. Existing guidelines of the Insurancecompletely included into ICICI Bank’s IT network
Regulatory and Development Authority (Irda) do notsoon,” said a banker on condition of anonymity.
permit a bank to distribute products of more thanThere is a proposal with Irda to allow banks to
one life insurance and one general insurance company.distribute products of multiple companies. However,
According to industry sources, the loss of Bank ofinsurance companies say even if there is a relaxation,
Rajasthan as a sharing partner will not make abanks may be allowed to sell policies of 2-3 life
significant dent on the sales of Aviva. Unlike the newcompanies.
generation private banks which have a big wealth“It is unlikely that banks will be allowed become a
management team that is active in selling thirdpartyvirtual broking firm, offering products of all companies
products, BoR sales were more in the form ofas it would be very difficult for employees to
referrals.understand the features of so many products,”
This is the second time that Aviva is losing asaid a banker.
bancassurance partner, following an M&A activity.