Spain's Bankia to pay $803 million for joint venture stake to Aviva

Spain's Bankia to pay $803 million for joint venture stake to AvivaSpain's Bankia has agreed to pay $803 million to UK based insurer Aviva to acquire its stake in the joint venture and settle a case involving breaching an exclusive distribution agreement.

Aviva announced that it has entered into an agreement with Bankia for the sale of stake and for the settlement clams relating to the breach of contract. The agreement comes after an abritration launched by Aviva during the previous year after the establishing of Bankia.

Bankia was formed after seven regional savings banks including Caja Madrid and Bancaja were merged into one entity. Aviva had purchased a 50 percent stake in insurer Aseval from Bancaja in 2000 and took over the management and control of the joint venture. The company had signed an exclusive agreement to distribute life insurance and pension products in the country.

Aviva claimed that the exclusive agreement was breached when Bancaja merged with the other entities under a government backed effort to reduce the number of unlisted banks. Under the new agreement, Aviva will transfer its entire holding in Aseval to Bankia.

Bankia said that the deal would help strengthen its insurance business and also clears the air over legal issues relating to the arbitration.