The Commonwealth Bank (CBA) has announced that it will demerge its wealth management and mortgage broking businesses, which will result in the creation of an independent wealth management business.
Australia’s biggest bank said in a statement it would demerge the entire wealth management and mortgage broking arms into a separately listed new company called CFS Group, inclusive of its Colonial First State Global Asset Management (CFSGAM) business. The previously announced IPO of CFSGAM will no longer proceed.
The bank’s salaried financial advice business, which employs more than 480 planners, Commonwealth Financial Planning, would be retained by CBA and would form part of its consumer financial services business within its retail banking services division.
CBA chief executive, Matt Comyn, acknowledged that the decision was partially due to community pressure on banks regarding their wealth management businesses.
“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,” Comyn said.
The Federal Court approved the Commonwealth Bank’s AUS$700m settlement with Australia’s financial watchdog AUSTRAC over claims its systems facilitated 53,800 breaches of money laundering and terrorism financing.
The bank will also undertake a strategic review of its general insurance business, including a potential sale.
In 2017, the CFS Group recorded earnings of more than AUS$500m of net profit after tax. It employs around 2000 staff.