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Prudential, the Insurance Giant Fined 30 Million Pound by FSA over AIA Bid

Prudential was fined 30 million Pound by the Financial Services Authority (FSA) on the grounds that it did not inform about its plans to buy AIA.

Mar 28, 2013 11:13 IST
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Prudential, the insurance giant was fined 30 million Pound by the Financial Services Authority (FSA) on the grounds that Prudential did not inform about its plans to buy AIA, an Asian subsidiary of US insurer AIG. The FSA while criticizing the Chief Executive of Prudential declared that the company failed to deal in a transparent and cooperative manner with FSA over the 2010 bid to buy AIA.

The fine levied on Prudential is one of the heaviest fines imposed by Financial Services Authority (FSA).

The deal of Prudential to buy out AIA however failed because of opposition from the shareholders. FSA declared that it should have been given more time for deciding whether the deal should be approved on the regulatory grounds or not. This is so because the proposed 14.5 billion Pound rights issue of Prudential to fund this purchase would have led to a complete makeover of the risk profile of the insurance company.

FSA announced that this deal would have created an impact on confidence as well as stability of financial sector of UK as well as abroad. However, Prudential was not able to strike a 35.5bn US dollar attempt for buying AIA because the shareholders vetoed this deal on the grounds of fear of too high purchase price.

The Chief Executive of Prudential on the other hand, argued that this deal should have gone ahead because it would then lead to doubling of market share of the company in Asia. However, the Chief Executive was not able to convince AIG for accepting the lower offer of 30 billion US dollar.

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