Cathay Life Insurance Co (國泰人壽) must apply to the Financial Supervisory Commission (FSC) before it can raise its stake in Indonesia’s Bank Mayapada Internasional Tbk PT beyond 40 percent, the commission said.
The nation’s largest life insurer by market share has reportedly been conducting due diligence on raising its stake in the Indonesian lender from 37.33 percent to 51 percent, Reuters reported on Monday, citing an Indonesian regulatory official.
Cathay Life must apply to the commission and submit an investment plan before it can undertake such a move, like when it applied to the commission to acquire a 40 percent stake in the Indonesian lender in 2015, Insurance Bureau Director Tsai Huo-yen (蔡火炎) told the Taipei Times by telephone.
Photo: Allen Wu, Taipei Times
The company would be required to elaborate on the investment’s expected returns, as well as its risk assessment, Tsai said.
Bank Mayapada has been engulfed in controversy since January, after one of its debtors, Benny Tjokrosaputro, was named a suspect in a bribery case involving PT Asuransi Jiwasraya, Indonesian media reported.
While the Indonesian regulator has demanded the bank’s major shareholders inject capital to shore up its capital strength, Cathay Life has no such obligation, as the local insurer does not have a controlling stake in the lender, Tsai said.
Even if the insurer has to recognize a loss from its investment in the Indonesian lender, the loss would not severely affect the insurer’s financial strength, as Cathay Life has invested a total of NT$13.31 billion (US$450 million) in Bank Mayapada, compared with the insurer’s net profit of NT$26.39 billion for the first six months of this year, Tsai said.
Cathy Life is still mulling raising its stake in Bank Mayapada, executive vice president Lin Chao-ting (林昭廷) said by telephone.
“We have not made a decision,” Lin said.
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