June 22 (SeeNews) - The Bank of Greece has rejected the proposed acquisition of the local life insurance operations of France's Credit Agricole by Bulgaria's Euroins Insurance Group (EIG) due to solvency capital issues of the buyer's subsidiary in Romania.
EIG's Romanian unit has not fully implemented the measures to achieve compliance with the solvency capital regulations and corporate governance requirements despite the fact that the non-compliance procedure has been ongoing since October 2015, the central bank said in a notice on Tuesday.
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Moreover, Credit Agricole Life is a larger company compared to EIG, which in combination with the non-implementation of recapitalisation measures by its subsidiary in Romania supports the bank's decision.
The Bank of Greece also said that the acquisition of Credit Agricole Life by Euroins before restoring the buyer's reputation would jeopardise the interests of policyholders and the compensation beneficiaries.
In July 2015, Romania's financial supervision authority ASF named Euroins Romania among a number of local insurers that need to strengthen their financial and solvency positions.
In November, ASF approved a financial recovery plan submitted by Euroins, which envisaged two share capital increases of a total amount of 400 million lei ($96.3 million/90 million euro).
EIG has already paid 200 million lei for the capital increase of Euroins Romania. Under the recovery plan, it may need to provide a second capital increase in the second half of 2016, depending on the company's financial results.
If additional capital is needed, the funds will come from the capital increase of EIG by 100 million euro ($112.7 million), which has already been entered in the Bulgarian Trade Register, Asen Christov, chairman of EIG parent, Eurohold Bulgaria, told SeeNews last week.
(1 euro=1.95583 levs)