Allied Bank buys 5% of New York Life

Allied Bank Corp. is reportedly buying a five-percent stake in New York Life Insurance Philippines Inc. for at least P75 million.

The equity acquisition paves the way for New York Life to sell its products within the premises of Allied Bank under the cross-selling circular recently issued by the Bangko Sentral ng Pilipinas (BSP).

Industry sources said the P75 million is just an "initial" payment and that the final acquisition may be more than five percent.

"Allied Bank and New York Life want to keep their options open as well as ensure full compliance with the BSP circular," the same sources said.

The buy-in proposal is with the BSP for approval.

The two financial institution started exploratory talks as far back as July in a bid to form an alliance which would allow the two to benefit from bancassurance, the term used by the insurance industry for the sales of their products through banking institutions. It is called cross-selling from the point of view of banks.

New York Life president and chief executive officer George B May in an earlier interview confirmed the talks but said nothing was final until the BSP has issued the cross-selling circular. The circular was finally issued last month outlining the parameters for bancassurance.

Banks can sell the products of their life insurance subsidiary as long as it controls mores than 50 percent of said subsidiary. Likewise, the circular states that an affiliate of the bank can also sell products as long as the bank controls at least five percent of the insurer. – Ted Torres