CBA offloads its global wealth business for $4.1 billion

(Cameron Spencer / Getty Images)
  • CBA is selling its wealth management arm to Japanese asset manager Mitsubishi UFJ Financial Group.
  • CEO Matt Comyn said the transaction reflects the bank’s desire to refocus on its core banking business.

Commonwealth Bank has announced the sale of its wealth management arm, Colonial First State Global Asset Management (CFSGAM).

CBA will sell the business to Japanese asset manager Mitsubishi UFJ Financial Group (MUTB) in a cash deal for $4.13 billion.

The sale follows an announcement by the bank earlier this year that it planned to spin off a separate entity which would include CFSGAM, CBA’s mortgage-broking business Aussie Home Loans, and the Colonial First State superannuation and life insurance business.

“As a result of the transaction, CFSGAM will not be included in the previously announced demerger of CBA’s wealth management and mortgage broking businesses,” the bank said.

“CFSGAM is a high quality business that has achieved strong growth under CBA’s ownership for over 18 years. MUTB is one of the largest asset managers in Japan, with a long history and deep capabilities. We believe that CFSGAM’s clients and employees will benefit from MUTB’s supportive longterm ownership”, said CBA’s Matt Comyn.

“Today’s announcement represents another important milestone in CBA’s strategy to focus on its core banking businesses and to create a simpler, better bank.”

The sale of CFSGAM to MUTB represents significant value for CBA shareholders and is a positive outcome for CFSGAM clients and employees.”

The deal values CFSGAM at 17.5 times its 2018 net profit of $236 million. CBA said the figure implies a post-tax gain on the sale of $1.5 billion.

Given the CFSGAM operates in a number of global jurisdictions, CBA said a number of regulatory hurdles will need to be met before the sale is finalised. The bank expects the deal to be completed by the middle of next year.

Given the global nature of CFSGAM’s business and the licensed entities that it operates, the Transaction is subject to a number of regulatory approvals in various jurisdictions including in Australia, Japan, Hong Kong, Singapore, the United Kingdom and the United States. The Transaction is expected to complete in mid calendar year 2019.

CBA said the deal will provide a boost to its Tier 1 capital position.

“We are delighted that CFSGAM, a highly distinguished, diverse and growing asset manager, is joining our group. We expect CFSGAM will continue to deliver leading investment solutions to its existing global client base,” said MUTB President and CEO Mikio Ikegaya.

Following the transaction, CBA said it remains committed to a de-merger of the other businesses into a new entity (NewCo).

“Jason Yetton will be appointed Chief Executive Officer and Andrew Morgan will be appointed Chief Financial Officer” of NewCo, the bank said.

Yetton is currently the CEO and Managing Director of Society One. “Prior to that he spent more than 20 years at Westpac and BT Financial Group,” CBA said.

Morgan will transition over from his current role as CFO of Commonwealth Bank’s wealth management arm.

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