LIC hikes stake in banks

Private insurers too show interest in the sector.


Ravi Ranjan Prasad

Mumbai, Feb. 6 Banking stocks were a favoured investment option for insurance companies, especially Life Insurance Corporation of India, during the December quarter.

LIC's stake in PSU and private banks moved up by one to four per cent during the last quarter, as the State-owned insurance company reduced stake in several other sectors, a study of BSE data showed.

Its stake in some PSU banks rose by between two and four per cent. The banks were Allahabad Bank (up 4.60 per cent), Oriental Bank of Commerce (2.60 per cent), Syndicate Bank (2.32 per cent) and Union Bank of India (2.18 per cent).

In some PSU banks, LIC's stake rose by between one per cent and two per cent. These institutions were Bank of India (1.63 per cent), Indian Overseas Bank (1.59 per cent), Bank of Baroda (1.53 per cent), SBI (1.33 per cent), Canara Bank (1.21 per cent) and Punjab National Bank (0.38 per cent).

Some of these banks saw LIC's stake exceed two digits. The insurance company's holding rose to 16.02 per cent in Oriental Bank of Commerce and to 10.99 per cent in Allahabad Bank.

LIC's investment in Corporation Bank, the bank in which LIC holds the most, remained unchanged at 26.32 per cent during the period.

The insurer's stake went up in private sector banks also. In HDFC Bank, the holding rose by 0.37 per cent to 5.07 per cent and in ICICI Bank, it went up by 0.35 per cent to 8.80 per cent.

Private sector insurance companies, too, have shown interest in banking stocks.

ICICI Prudential Life Insurance Company has raised its stake in Bank of India (1.61 per cent), SBI (from less than a per cent to 1.54 per cent), HDFC Bank (0.15 per cent) and Axis Bank (0.14 per cent). However, it reduced holding in Punjab National Bank by 0.65 per cent.

Reliance Life Insurance raised its stake in Dena Bank by 1.08 per cent.

LIC also raised stake in Sensex power stocks Reliance Infrastructure and Tata Power, by more than one per cent in each. In the same quarter it reduced stake by between one and three per cent in some blue-chips in FMCG, automobile, metals and pharmaceuticals.

LIC has reduced stake by 2.43 per cent in Hindalco to 8.80 per cent, and pruned holdings in Hindustan Unilever and ITC by less than one per cent each, to 5.89 per cent and 13.98 per cent, respectively. In Ranbaxy, too, LIC reduced stake by 0.79 per cent to 7.28 per cent.

LIC's holds more than 10 per cent in 10 companies on the Sensex. Some time ago, the IRDA had indicated that LIC reduce stakes in listedfirms to less than 10 per cent.

The insurer holds more than 10 per cent stake in M&M (17.61 per cent), ACC (17.48 per cent), L&T (17.38 per cent), Maruti (14.36 per cent), Reliance Infra (12.99 per cent), Tata Motors (10.27 per cent), Tata Power (11.44 per cent) and Tata Steel (11.56).