The Commonwealth Bank has provisioned $200 million to indemnify its wealth management and mortgage broking businesses which are being separated from the bank.
In an announcement released to the Australian Securities Exchange (ASX) today the bank said the $200 million would be held as an indemnity to provision for historical remediation issues and associated program costs, including ongoing service fees charged by aligned advisors of the group.
The ASX announcement also dealt with insurance recoveries, noting that a total $135 million had been received by the Commonwealth Bank as a result of professional indemnity insurance recoveries relating to the civil penalty and legal costs incurred in the 2018 financial year.
It said a provision of $100 million would be recognised to cover the higher than expected total cost of the multi-year financial crime compliance Program of Action and other ongoing compliance and remediation programs.
The announcement said this was in addition to provisions take for the Program of Action in the year ended 30 June 2018, and previously announced remediation provisions for Credit Card Plus, Personal Loan Protection and Home Loan Protection Insurance.
The ASX announcement said the bank wold also recognise a further $55 million provision for transaction and separation costs in relation to the sale of CommInsure Life, largely due to the revised completion date.
It said this was in addition to the $194 million transaction and separately costs associated with the dispose of both CommInsure and Sovereign recognised in the year ended 30 June, 2018.
