Commonwealth Bank has been given the green light to sell its major stake in a Chinese insurance company, which is part of its wider divestment overhaul from wealth and insurance businesses.
The country’s largest bank on Wednesday announced it had been granted approval by the China Banking and Insurance Regulatory Commission to sell its 37.5 per cent share in BoCommLife to MS&AD Insurance for $886 million.
Its decision to bow out of the Chinese insurance market is the latest divestment by CBA, which is seeking to simplify its operations to predominantly focus on retail and business banking.
In May, CBA flagged it had agreed to sell 55 per cent of its wealth business Colonial First State to global investment giant KKR.
It has also divested from Colonial First State Global Asset Management and CommInsure.
Australia’s big four banks have been actively reducing exposure to both the wealth and insurance industries after the banking royal commission uncovered serious operational issues in both sectors.
CBA said the sales of BoCommLife and other divestments were expected to rake in $840 million in post-tax earnings for the first half of the current financial year.
CBA said the sales of its Australian insurance business were expected to occur in the latter half of the 2021 financial year.
“The ultimate completion of the divestment of CommInsure Life is now currently expected to occur via a statutory asset transfer in the second half of FY21 rather than on the basis of the original share sale structure,” CBA said.
CBA said the sale of the BoCommLife Insurance and other divestments would push the bank’s capital buffers up by 29 basis points.
The bank expects the sale of BoCommLife to be completed by December 31.