The commercial bank, which is controlled by taipan Lucio Tan, is said to be holding exploratory talks with New York Life Insurance Phils. Inc. (New York Life), a new player in the country’s insurance industry.
Allied Bank is reportedly planning to buy at least five percent of New York Life’s equity, which would thus classify the life insurer as an "affiliate" of the bank.
Unconfirmed reports have it that the bank had already submitted a proposal with the financial regulatory body.
The much-awaited BSP circular on cross-selling when released will allow commercial banks to sell financial products of their subsidiaries or affiliates. To be classified as a subsidiary, the bank must own at least 51 percent of the insurance company, for example. If the bank owns at least five-percent equity of, for example again, the insurance firm then the latter could be classified as an affiliate.
"Much hinges on what would the features of the BSP regulations on cross-selling," industry sources said. The global insurance industry calls it bancassurance (or the fusion of banking and insurance activities).
New York Life president and chief executive officer George B. May admitted that they have been talking with Allied Bank as part of its multi-distribution strategy. The US-based insurer has been in operation for less than two years.
"Part of that strategy is to forge alliances with banks to initiate bancassurance," May said. "But we will only initiate concrete plans based on the BSP regulations."
Allied Bank officials confirmed that they are interested in cross-selling financial products as a means of enhancing their banking activities.
"The bank is open to cross-selling," an unnamed executive said. "But without the BSP regulation the bank will remain in the conservative side."
The same executive did not deny that there are exploratory talks with New York Life while claiming that there are a lot of insurers that have been "hitting the streets" for a bank.
On whether they are prepared to buy a stake with New York Life, they simply said "there is no confirmation."
Allied Bank has a subsidiary in Allied Bankers Insurance Corp., which is a non-life insurance company. The bank has over 400 branches nationwide which a new player like New York Life can very well take advantage of.
In turn, a reputable foreign life insurance firm can add to the personal banking products of the commercial bank.