19 Jul 2019

Rejected Resolution, AMP A$3.5b deal their own fault - RBNZ

2:04 pm on 19 July 2019

The collapse of a multi-billion dollar deal to sell AMP's life insurance division to a British company for $3.6 billion is the fault of the companies, according to the Reserve Bank.

AMP is an Australian financial services company. This is its office in Melbourne.

Photo: 123rf

The central bank has told RNZ that the buyer, Resolution, and AMP notified it of the proposal last September, but only put in a formal application for RBNZ approval last month.

"[In September] we promptly made them aware of the New Zealand regulatory requirements," the RBNZ said.

"Resolution eventually provided a formal application for Reserve Bank consideration on 7 June 2019."

Earlier this week the two companies said the RBNZ had blocked the deal because Resolution would not ring-fence the New Zealand assets.

Foreign-owned banks and insurance companies are required to set up local branches and ring-fence local assets and operations to protect the interests of local investors and customers.

The Australian-owned AMP operated a branch in New Zealand under an exemption because regulations covering insurance companies were similar on both sides of the Tasman.

AMP said the application failure was "exceptionally disappointing", and it was highly unlikely the deal would proceed.

"This failure occurred despite the Reserve Bank's guidance and information provided as necessary throughout the transaction process," the RBNZ said

The sale of AMP's life insurance and wealth protection division was the core of its turnaround strategy, after its net profit fell 97 percent last year following the fall out of the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

AMP was embroiled in the inquiry's fees for no service scandal, which revealed it charged customers for services they never received and lied to regulators about it.

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