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CBA to demerge and list wealth management

Stuart Condie  |  25 Jun 2018Text size  Decrease  Increase  |  
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SYDNEY [AAP] - Commonwealth Bank will demerge and list its wealth management and mortgage broking businesses, and is looking at selling its CommInsure insurance unit.

CBA's Colonial First State, Colonial First State Global Asset Management, Count Financial, Financial Wisdom and Aussie Home Loans, which together made more than a $500 million profit in the 2017 financial year, will be listed as CFS Group some time in 2019.

The businesses, which together made a pro forma net profit of more than $500 million in 2017, will be spun off some time in 2019.

Chief executive Matt Comyn, who on Monday also announced six executive appointments, indicated that the decision to simplify the bank was partially driven by a desire to limit exposure to areas that have attracted criticism during the ongoing industry royal commission.

"Today's announcement is another step in our stated priority to become a simpler, better bank and has followed a thorough review of the group's businesses and its optimal organisational structure," Mr Comyn said.

"It also responds to continuing shifts in the external environment and community expectations, and addresses the concerns regarding banks owning wealth management businesses."

CBA shareholders will receive shares in CFS Group proportional to their existing CBA shareholding, but the bank does not plan to retain a stake.

"It is a clean and timely exit of all of these businesses," Mr Comyn said.

The move follows similar moves by rivals ANZ and National Australia Bank to cut their exposure to wealth management, although the Commonwealth Financial Planning unit - whose staff are salaried rather than paid according to sales - will be retained and incorporated into retail banking.

CommInsure, which provides home and contents and motor vehicle insurance, is also subject to a strategic review.

CBA said one option was a sale and partnership with a specialist insurance provider, similar to the arrangement to which ANZ in 2017 agreed with IOOF Holdings with the $975 million sale of its wealth business.

 

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© 2020 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

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