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* Deal is last remaining such opportunity in Asia
* Manulife and incumbent Aviva also bidding
* Deal allows insurers to sell through DBS branches (Adds details of other bidders, background on bancassurance)
By Denny Thomas
HONG KONG, Feb 4 (Reuters) - AIA Group Ltd, Prudential plc and Manulife Financial Corp are among firms shortlisted to become the insurance partner of Singapore's DBS in a bank distribution deal worth around $1.5 billion, people familiar with the matter said.
DBS's bancassurance deal, under which it will distribute products exclusively of the chosen partner over 15 years, is the last major agreement of this kind available for insurers keen to tap into Asia's fast-growing insurance market.
Current DBS partner Aviva plc has also been shortlisted for the agreement that starts next year, the people told Reuters.
Late last year, DBS hired Morgan Stanley to advise on the deal. It was not immediately clear when the final selection of an insurance partner for DBS would be made.
DBS is keen to partner with just one insurer for all the Asian markets it operates in, but to create competition in the process and have flexibility, it has also shortlisted Canada's Sun Life Financial Inc, Richard Li's Hong Kong-based insurer FWD Insurance and Metlife Inc, who have submitted bids only for smaller markets, the people said.
DBS and all of the insurers declined to comment. The people declined to be identified as the matter is not public yet.
Singapore and Hong Kong - two of DBS's strongest markets - are seen as profitable for insurers due to their status as Asia's main wealth management centres and their ageing populations. DBS also operates in India, Indonesia and Taiwan.
The so-called bancassurance model - as opposed to the traditional agency model - is lucrative for commercial banks in Asia because global insurers are willing to pay hefty fees for access to lenders' branch networks.
Insurers value the deals because they offer exclusive access to banks' large branch networks across Asia and the opportunity to sell to the bank's customers inside the branches.
Asia's largest retail banking networks belong to Citi, HSBC and Standard Chartered, but those deals have already been locked up, leaving DBS as the last major partner available to insurers.
DBS's planned deal comes after AIA struck a 15-year exclusive deal with Citibank in Asia, for which AIA said it paid an $800 million upfront payment. Prudential renewed last year a 15-year agreement with StanChart for $1.25 billion.
HSBC signed a 10-year deal with Germany's Allianz SE in 2012. (Additional reporting by Lawrence White in HONG KONG and Saeed Azhar in SINGAPORE; Editing by Lisa Jucca and Muralikumar Anantharaman)