Commonwealth Bank of Australia (CBA) has decided to demerge its wealth management and mortgage broking businesses, as part of its effort to focus more on its core banking businesses in Australia and New Zealand.
CBA has also announced that it will undertake a strategic review of its general insurance business, including a potential sale.
The demerged business CFS Group will comprise of CBA’s Colonial First State, Colonial First State Global Asset Management (CFSGAM), Count Financial, Financial Wisdom and Aussie Home Loans businesses.
Colonial First State is a superannuation, investment and retirement solutions platform with more than $135bn of funds under administration, while CFSGAM is a global investment management business that manages more than $207bn of assets for clients across the globe.
CBA’s third-party distribution businesses include financial advice businesses Count Financial and mortgage broking business Financial Wisdom and Aussie Home Loans
CBA will retain its salaried financial advice business, Commonwealth Financial Planning, and include in the retail banking services division.
As per terms of the deal, CBA shareholders will secure shares in CFS Group proportional to their existing CBA shareholding, while retaining their existing CBA shares.
The demerger, which is subject to final CBA board, shareholder and regulatory approvals, is expected to be completed in 2019.
CBA CEO Matt Comyn said: 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 to drive growth and shareholder value for all businesses.
“It also responds to continuing shifts in the external environment and community expectations, and addresses the concerns regarding banks owning wealth management businesses.
“By allowing CBA and CFS Group to focus on their core businesses and market leading positions, we believe the plan will unlock value in both groups for our shareholders.
Image: Commonwealth Bank of Australia is set to demerge its wealth management and mortgage broking businesses. Photo: courtesy of Commonwealth Bank of Australia.