SINGAPORE - OCBC Bank has made a $1.4 billion bid to take its insurance arm Great Eastern Holdings private following recent shareholder unhappiness over falling returns.
The shares shot up after trading resumed around 1.10pm following a morning halt. They were up 7.1 per cent to $25.81 as at 2.16pm. It added that the offer is expected to be earnings accretive to the bank, with Great Eastern contributing an average of about $700 million annually in net profit to the bank over the past 10 years.Asked about the timing of the offer, group chief executive Helen Wong described the bid as a “natural move” as the bank strengthens its wealth business.
Great Eastern provides insurance solutions to customers through three distribution channels – a tied agency force, bancassurance and financial advisory firm Great Eastern Financial Advisers. Another question was raised about how the group’s 88.4 per cent stake in Great Eastern may have contributed to the low trading liquidity and weak market value of the insurer’s shares.“OCBC is not in the business of providing liquidity for another company,” he said.
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