| ING Vysya Life Insurance’s vice-president & head of marketing Gautam Sharma (left) with president & deputy managing director Yvo R. Metzelaar at the launch of the company’s insurance products in Calcutta on Monday. ING Vysya Life offers four principal products and as many riders. Few more products are in the pipeline. Picture by Kishor Roy Chowdhury.
Calcutta, Oct. 21: Dutch financial services group ING — the fourth largest in the world —is likely to increase its stake in Vysya Bank by 5 per cent within the next couple of months, ING representatives in India said.
ING holds 43.99 per cent in the bank, having recently hiked its stake by 23.99 per cent at an investment of Rs 340.8 crore. ING holds the stake through its subsidiary Bank Brussels Lambert.
In order to increase its shareholding to 49 per cent, ING may have to buy out the 5 per cent stake held by the International Finance Corporation (IFC) since foreign direct investment in an Indian bank is capped at 49 per cent. IFC held 10 per cent in Vysya Bank previously. It sold half of its holding to ING in August, paving the way for the Dutch financial services group to raise its stake to 44 per cent.
IFC officials were not available for comment on ING’s plans to increase its stake by another 5 per cent. ING officials, too, did not elaborate how the Dutch group would raise its stake in the Bangalore-based bank.
While selling 5 per cent to ING in August, IFC officials had said the Washington-based multilateral funding agency would hold on to the balance 5 per cent stake in Vysya Bank.
The GMR Group was the main promoter of Vysya Bank until ING emerged as the single largest shareholder. The group continues to hold 6.68 per cent and has a number of representatives on the bank’s board.
Meanwhile, due to the increase in ING’s stake, Vysya Bank may have to reduce its holding in ING Vysya Life Insurance Company. Vysya Bank now holds 49 per cent in the life insurance venture, while ING holds 26 per cent and GMR Group 25 per cent. The company has a paid-up equity of Rs 140 crore.
Yvo R. Metzelaar, deputy managing director of the company, said: “The equity recast is being discussed with the regulators — Insurance Regulatory and Development Authority (IRDA). Vysya Bank may be required to divest part of its stake in the company in favour of the GMR Group to reduce the indirect foreign control. But ING’s stake in the life insurance venture should remain unchanged at 26 per cent.”
Besides banking and life insurance, ING offers asset management services through ING Savings Trust. ING is also keen to enter the pension business.
Metzelaar said: “Till private players are allowed to run pension funds, we can offer pension products through the life insurance company. But ideally it should be run as a separate business.”