KTB off-loads its shares in insurance firms
Krungthai Bank has sold its stakes worth Bt4.8 billion in life and non-life insurance companies to KTB Capital Holding to comply with the law and restructure its shareholding.
Kittiya Todhanakasem, first senior executive vice president of KTB, said yesterday that the Insurance Act of 1992 required that the shareholders of an insurance company who are individuals or juristic persons must be Thai nationals.
The definition of "shareholder" does not include a state-run agency, so the bank was afraid that if its shareholding were not restructured, it might run afoul of the act when it is enforced in February, she said.
The bank has set up a holding company called KTB Capital Holding, in which it holds 49 per cent.
According to its filing to the Stock Exchange of Thailand, it has sold 67.75 million shares in Krungthai-Axa Life Insurance at Bt56.59 each, totalling Bt3.83 billion, and 2.75 million shares or 25 per cent in Krungthai Panich Insurance (KPI) for Bt966 million to KTB Capital Holding.
The Insurance Commission is amending the definition of shareholders to cover a state agency. If the act is amended, KTB will review its shareholding structure again.
KTB has not yet transferred its 19-per-cent equity in Dhipaya Insurance to the holding company because KPI is also a shareholder in Dhipaya, so KTB might have to make a tender offer, which is a complicated process. Dhipaya might negotiate with the regulator to waive the fines.
The bank prefers to hold on to Dhipaya because the insurance company contributes a good return, Kittiya said.
Weidt Nuchjalearn, senior executive vice president of KTB, said the bank believed that its employees should learn communication skills so bankers can also serve as financial advisers. KTB will give them training after the Bank of Thailand started closely monitoring the hard sale practices of commercial banks.
"Customers must be made to understand the importance of insurance from our staff before making a decision. Communication skills are the key to success of insurance sales," he said.
Of the 18 million accounts at KTB, fewer than 10 per cent have purchased insurance products via the bancassurance channel.
KTB plans to raise the proportion of customers who purchase insurance to 30 per cent next year by targeting individuals and groups of customers such as cooperatives and companies.
Fee income generated by bancassurance passed the Bt1-billion mark this year and the bank wants it to grow by 21 per cent next year, Weidt said.
Competition in the bancassurance market is expected to heat up, so the bank might have to spend more on marketing activities, he added.
