Commonwealth Bank to sell stake in China life insurer for $668m

CBA has flagged the sale of its stake in BoComm Life Insurance to Japan’s Mitsui pending Chinese regulatory approval.

A Commonwealth Bank in Sydney. Picture: AAP

Commonwealth Bank of Australia has sold its $670 million stake in a Chinese life insurer as the lender continues to shed various non-core businesses and return to a focus on mortgage lending.

CBA (CBA) said on Wednesday that it has sold a 37.5 per cent stake in Chinese life insurer BoComm for 3.2 billion yuan ($668m). Japan’s Mitsui Sumitomo Insurance will buy the asset assuming it can secure the support of Chinese regulators.

It makes another step for CBA as it turns away from years of expansion into insurance and wealth management, both locally and abroad.

The bank will likely float its global asset management arm on the local stock exchange, which is likely to result in the year’s largest initial public offering, likely worth nearly $5bn. CBA has also sold its life insurance arm CommInsure to Hong Kong’s AIA Group for $3.8bn. CBA is also considering the sale of its Count Financial and Financial Wisdom advice arms.

CBA chief executive Matt Comyn said the group was focusing on slimming down the nation’s largest bank.

“This transaction represents a further step in simplifying and focusing our portfolio and follows the announcement of the proposed sale of the group’s life insurance businesses in Australia and New Zealand to AIA Group, and the strategic review of the group’s life insurance business in Indonesia,” Mr Comyn said.

CBA said it expects to make an after-tax gain of around $450m on the sale. It added that net proceeds after making a capital contribution to BoComm will boost its CET1 capital buffer by 13 basis points.

It’s the latest in a string of moves by Australia’s largest banks to strip themselves of problematic or underperforming businesses, in a bid to refocus on home loans and deposits, which are traditionally far more profitable.

Last week ANZ sold its majority stake in a Cambodian joint venture in a move that further unwinds the bank’s exposure in the region. The sale of a 55 per cent stake in ANZ Royal Bank to Japanese financial house J Trust was booked at a $30m loss. The bank has been selling minority stakes in Asian lenders since chief executive Shayne Elliott took over from previous boss Mike Smith, who had led a big push into Asia.

In life insurance, ANZ sold its wealth arm OnePath, while National Australia Bank recently sold 80 per cent of its life insurance business to a Japanese company. Westpac, which launched a partial listing of its BT Investment Management in 2007, recently said it would sell down its remaining stake in the $3.8bn fund manager.

With Dow Jones