Commonwealth Bank will sell Colonial First State Global Asset Management to Mitsubishi UFJ for $4.13 billion and continue with its plans to spin off its wealth management and mortgage broking businesses.
News of the $4.31 billion sale was followed up with an announcement that CBA will hire former Westpac executive - and former SocietyOne chief executive - Jason Yetton to head up the wealth and mortgage broking operations that CBA wants to offload.
The deal with Mitsubishi UFJ follows CBA's announcement in June regarding its intention to spin off the wealth management and mortgage broking businesses but CBA subsequently decided a straight sale of CFSGAM was in the best interests of customers, shareholders, and staff.
“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," said CBA chief executive Matt Comyn in a statement.
“CFSGAM is a high-quality business that has achieved strong growth under CBA’s ownership for over 18 years."
Mitsubishi UFJ is one of the largest asset managers in Japan, with a long history and deep capabilities and Comyn reckons that the CFSGAM’s clients and employees will benefit from its supportive long-term ownership.
Australia's biggest bank expects to book a post-tax gain from the sale of about $1.5 billion, which includes estimated post-tax separation and transaction costs of about $100 million.
MUFJ is paying 17.5 times CFSGAM pro forma 2018 net profit of $236 million.
The deal, which still need regulatory approval in Australia, Japan, Hong Kong, Singapore, the UK and the US, is expected to clear around the middle of next year.
Upon completion, the deal is expected to deliver an increase of approximately $2.9 billion of common equity tier one capital, resulting in a pro forma uplift to the Group’s 2018 CET1 ratio of about60 basis points on an APRA basis as at 30 June 2018.