USA (Transatlantic Today) – OCBC Bank has formally reaffirmed its stance on Great Eastern Holdings (GEH), clarifying that it will not engage in actions to enhance the insurer’s liquidity or influence its share price. At the annual general meeting (AGM) held on April 30, 2024, OCBC, which holds an 88.4% ownership stake in GEH, underscored this position. Chairman Andrew Lee emphasized that while OCBC operates as a diversified financial conglomerate with interests in banking, asset management, and insurance, it does not interfere with the liquidity management of its subsidiary.
The concept of conglomerate banking was debated during the AGM, especially in comparison with peers like DBS Group Holdings and United Overseas Bank (UOB), which have divested their insurance arms. DBS CEO Piyush Gupta criticized the conglomerate model, arguing that banking and insurance are distinct sectors with limited synergy. Gupta suggested that focusing on core banking operations rather than owning and managing insurance businesses has been more beneficial for DBS.
Shareholder Pressures and Strategic Options
At the AGM, OCBC faced questions about its future strategy regarding GEH. Shareholders inquired whether the bank plans to distribute GEH shares or increase its stake further. Helen Wong, OCBC’s group CEO, discussed the value of potential distributions but stressed that any decision would depend on the capital position and strategic value for shareholders.
According to Sg.Finance, OCBC’s recent actions included purchasing an additional 2.3 million GEH shares in June 2023, increasing its stake. Shareholders continued to debate whether OCBC should consider taking GEH private, with Lee affirming that the bank remains open to exploring strategic opportunities, though it has no immediate plans to make significant changes.
Management and Reward Strategies
There were also discussions about the possibility of distributing GEH shares to the insurer’s executives, with some shareholders suggesting that such a move could address low liquidity issues. Lee clarified that decisions regarding the distribution of GEH shares to its executives are made by the GEH board independently of OCBC’s influence.
Lee reassured shareholders that OCBC is not hoarding capital despite its strong common equity tier-1 (CET-1) ratio of 15.9% for FY2023. He emphasized that the bank will strategically deploy its resources where they align with its goals and provide the right value.
OCBC is scheduled to release its 1QFY2024 results on May 10, 2024, providing further insights into its financial performance and strategic direction.
