DBS’s bancassurance deal is the last major agreement of this kind available for insurers keen to tap into Asia’s fast-growing insurance market. The deal will have DBS distribute products exclusively of the chosen partner over 15 years.
The Singapore banking group’s current partner Aviva plc has also been shortlisted for the agreement that starts next year, a Reuters report said quoting sources.
Late last year, DBS hired Morgan Stanley to advise on the deal. It was not immediately clear when DBS would complete the selection of its insurance partner.
It was reported that DBS is keen to partner with just one insurer for all the Asian markets it operates in, but to create competition in the process and have flexibility, it has also shortlisted Canada’s Sun Life Financial Inc, Hong Kong-based insurer FWD Insurance and Metlife Inc, who have submitted bids only for smaller markets.
FWD Insurance is run by tycoon Li Ka-Shing’s business man son Richard Li.
DBS and all of the insurers declined to comment, the Reuters report by Denny Thomas from Hong Kong added.
The so-called bancassurance model – as opposed to the traditional agency model – is lucrative for commercial banks in Asia because global insurers are willing to pay hefty fees for access to lenders’ branch networks.
Insurers value the deals because they offer exclusive access to banks’ large branch networks across Asia and the opportunity to sell to the bank’s customers inside the branches.
Asia’s largest retail banking networks belong to Citi, HSBC and Standard Chartered, but those deals have already been locked up, leaving DBS as the last major partner available to insurers.
Singapore and Hong Kong, being two of DBS’s strongest markets, are seen as profitable for insurers as they are Asia’s main wealth management centers with aging populations. DBS also operates in India, Indonesia and Taiwan.
DBS’s planned deal comes after AIA struck a 15-year exclusive deal with Citibank in Asia, for which AIA said it paid an $800 million upfront payment.
Prudential renewed last year a 15-year agreement with StanChart for $1.25 billion. HSBC signed a 10-year deal with Germany’s Allianz SE in 2012.