Business

GE eyes sale of large stake of M'sia operations


Insurer Great Eastern Holdings (GE) has reportedly engaged at least one Malaysian bank to explore selling a large stake in its operations over the Causeway for as much as US$1 billion (S$1.35 billion).

The move likely comes in the wake of a central bank rule - which has been in place since 2009 but not enforced - that requires foreign insurance firms in Malaysia to have at least 30 per cent held by domestic investors.

A recent Wall Street Journal (WSJ) article said they "are facing a June 2018 deadline to comply with the rules, which were set by Bank Negara Malaysia".

Potential buyers - not just for the GE stake but for shares in other foreign insurers facing the same issue - will likely be local institutions such as the Employees Provident Fund, Malaysia's largest state pension fund, and Malaysian sovereign wealth fund Permodalan Nasional.

Many insurers started in Malaysia years ago "on the understanding that they would eventually comply with a 2009 rule that capped foreign ownership of local insurance companies at 70 per cent", noted the WSJ on Monday.

The Malaysian government had exempted several foreign firms from that rule, it added. But in July, the central bank said: "As the regulator, Bank Negara Malaysia expects adherence to these agreements and will play a facilitative role to ensure these commitments are met."

The Straits Times reported last month that Singapore's GE, a unit of OCBC Bank, and three other foreign-owned insurers - AIA, Prudential and Tokio Marine - were under pressure to comply with the rule.

FOR MORE, READ THE STRAITS TIMES TODAY

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