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.
The demerged business, CFS Group, would include the Colonial First State, Colonial First State Global Asset Management (CFSGAM), Count Financial, Financial Wisdom and Aussie Home Loans businesses.
As a result, CBA told the ASX that the previously announced initial public offering of CFSGAM would not proceed. The bank said that as an independent business, CFS Group could “enable CFSGAM to realise its full potential for its customers and staff”.
The bank’s salaried financial advice business, 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.
“It also responds to continuing shifts in the external environment and community expectations, and addresses the concerns regarding banks owning wealth management businesses.
“By allowing CBA and CFS Group to focus on their core businesses and market-leading positions, we believe the plan will unlock value in both groups for our shareholders.”
The bank also announced that it will undertake a strategic review of its general insurance business, CommInsure, including a potential sale.