Scotland based insurance major Standard Life Plc. said today that its talks with Bank of China (BoC) for a possible joint venture in China have broken down.
Standard Life had hoped that BoC will acquire controlling stake in the company’s Heng An Standard Life business in China. A majority shareholding by BoC would have qualified Heng An as domestic insurance company, thus ensuring more freedom for its domestic operations in China.
The Chinese joint venture sells a wide range of insurance products in 31 Chinese cities and was set up in 2003. It has 350,000 customers in China and recorded £116 million in sales last year.
Standard Life had announced last year September that talks with Chinese regulators were in an advanced stage for a majority stake acquisition in China.
In the present of the joint venture, half of the stake is controlled by state owned investment agency Tianjin TEDA and other half by Non-Chinese owners.
Talking about prospects of doing business in China, Standard Life last year said that the possible majority ownership by BoC will give the business access to “excellent distribution strengths, and there continues to be significant growth potential across the fast-developing life insurance industry in China”.
Scottish First Minister Alex Salmond on a visit to Tianjin in July had backed the company while last month the company CEO David Nish travelled to China accompanying a business entourage lead by Prime Minster David Cameron.
However, after 15 months of announcing that they were in the final stages of negotiation, Standard Life posted a statement with the London Stock Exchange saying “It has not proved possible for the parties to reach agreement. Standard Life will continue to develop Heng An Standard Life in partnership with its existing joint venture partner.”
“We were very positive about the talks. There’s disappointment that the parties haven’t managed to reach agreement, but our business is well-established out there. We’ve got a very successful joint venture in India, so our focus on Asia will continue”, said a source in Standard Life. Joint ventures of Standard Life represent only 1% of its total sales, Standard Life announced.