French insurer Axa SA agreed to sell banking unit AXA Bank Belgium SA to Belgian cooperative lender Crelan Bank for a total consideration of €620 million.
The transaction consists of a cash consideration of €540 million, subject to price adjustment at closing. The deal also includes the complete sale of Crelan Bank's insurance arm, Crelan Insurance SA, which is valued at €80 million, to Axa Belgium SA.
Axa noted that the transaction is expected to have a positive impact of about 4 percentage points on the French insurance group's Solvency II ratio. The Paris-based company also anticipates a one-off negative charge of roughly €600 million on net income in its full-year results.
Axa Bank Belgium recorded underlying earnings of €47 million in 2018, excluding favorable nonrecurring impacts of €36 million.
The deal, which is subject to customary closing conditions, including regulatory approvals, is expected to complete in the second quarter of 2020. Axa noted that its other banking activities are not affected by the transaction.
Meanwhile, Axa said it will acquire a 9.9% equity stake in Crelan NV and Axa Bank Belgium, investing a total of €90 million, with Crelan Bank having a call option to purchase Axa's shares in Crelan NV and Axa Bank Belgium. The investment will be fully financed by Crelan Bank's purchase of the contingent convertible bonds issued by Axa Bank Belgium to Axa for €90 million.
Additionally, Axa and Crelan Bank entered a long-term property and casualty and protection insurance distribution partnership, expanding the partnership between Axa Bank Belgium and Axa Belgium to the entire Crelan Bank network.