Commonwealth Bank of Australia (ASX:CBA) shares have risen 59 cents or 0.8 per cent to $74.45 after the bank said will demerge and list its wealth management and mortgage broking businesses, and is looking at selling its CommInsure insurance unit.
CBA’s Colonial First State, Colonial First State Global Asset Management, Count Financial, Financial Wisdom and Aussie Home Loans, which together made more than a $500 million profit in the 2017 financial year, will be listed as CFS Group some time in 2019.
“Today’s announcement is another step in our stated priority to become a simpler, better bank,” chief executive Matt Comyn said in a statement on Monday.
“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.”
CBA’s salaried financial advice business, Commonwealth Financial Planning, will be retained by CBA and will form part of its consumer financial services business.
“The ability to provide high-quality banking services and in-house financial advice to CBA customers will remain fundamental to CBA’s focus on customers’ financial wellbeing and we will deliver that through a new model for advice that is safe, simple and scalable,” Mr Comyn said.
CBA shareholders will receive shares in CFS Group proportional to their existing CBA shareholding, while retaining their existing CBA shares. CBA does not intend to retain any shareholding in CFS Group following the demerger.
CBA shares have had a good recent run, the bank’s share price jumping 10 per cent higher since hitting a multi-year low earlier this month.