Britain’s largest insurance company, Prudential, has been fined the equivalent of 35 million euros over its failed attempt to buy Asian rival AIA three years ago.
The Financial Services Authority imposed the fine because Prudential had not told the UK financial regulator about the takeover bid, even after it had been leaked to the media.
The FSA said it should have been informed because the size and scale of the deal – including a planned 14.5 billion pound cash call -would have transformed Prudential’s financial position, strategy and risk profile.
That would have “had the potential to impact upon the stability and confidence of the financial system in the UK and abroad,” the FSA said.
The deal collapsed after Prudential’s investors baulked at the price and AIA’s parent, U.S. insurer AIG, rejected a lower offer. Prudential shareholders were left shouldering 377 million pounds in costs, prompting calls for the resignation of Chief Executive Tidjane Thiam and former chairman Harvey McGrath.
The FSA said Thiam played “a significant role” in the decision not to contact the FSA about the Asian expansion plans and that he was “knowingly concerned in this breach”. But the regulator stopped short of declaring him unfit.
Prudential said it regretted, with hindsight, not informing the FSA earlier about its Asian plans. But it emphasised that the investigation was into past events, did not concern current conduct and that the FSA did not consider its breaches “reckless or intentional”.
“We wish to draw a line under the matter, and to ensure our constructive relationship with our regulators remains good,” Prudential Chairman Paul Manduca said in a statement.