The Commonwealth Bank is selling its 80% stake in an Indonesian life insurance business for $426 million and will use the profit from the sale to boost capital reserves ahead of the start of tougher new rules from 2020.
The CBA said yesterday it would make a post-tax profit of about $140 million on the sale to FWD Group.
The CBA started the business in 1992. The sale will see the bank increasing its common equity tier 1 capital ratio by 0.07 percentage points.
“The transaction aligns with CBA’s strategy to focus on its core banking businesses and to create a simpler and better bank,” CBA said in a statement on Tuesday.
CBA’s Indonesian banking business, PT Bank Commonwealth, will distribute FWD products under a 15-year agreement once the deal completes in the first half of the 2019 calendar year.
Like its major rivals, CBA has been divesting non-core assets and is already generating $3.8 billion from the sale of its NZ insurance unit and local CommInsure Life business to AIA.
The Sovereign sale of AIA in NZ completed in July, while the CommInsure sale is expected to go through in the first half of 2019 when CBA also expects to wrap up the $688 million sale of its stake in Chinese life insurer BoComm Life.
It is readying itself to divest – either through sale or spin-off – of its huge Commonwealth Frist State funds management arm.
CBA shares eased 1% to $65.61 yesterday.
