Axis Bank, which entered into a Bancassurance arrangement with Max New York Life last year, has received approvals from RBI and IRDA to acquire 4% of Max New York Life at Rs 72 crores. The stake has been acquired by Axis Bank at par and is quite obviously at a discount to Max New York Life's market value. Axis would have bargained to acquire this stake in lieu of entering the distribution agreement with Max New York Life. Previously, Axis Bank had a Bancassurance agreement with MetLife, and accounted for more than 50% of MetLife's total business.
Acquiring stake of the insurer by the bank seems to be a new trend in the Bancassurance space. As the distribution reach provided by banks becomes more crucial for insurers desperate for market share, banks will demand a bigger pound of flesh and ask for more significant stake in the insurer. PNB, one of the largest banks in India, is in the final stages of selecting its Bnacassurance partner for life insurance. Bharti Axa Life, MetLife and Aviva are in the fray. It would be interesting to see how much stake of the insurance company PNB demands.