The Commonwealth Bank of Australia (CBA) has agreed to sell its global asset management business, Colonial First State Global Asset Management (CFSGAM), to Mitsubishi UFJ Trust and Banking Corp (MUTB) for A$4.13bn (£2.3bn, $2.93bn, €2.58bn).
As a result of the deal, CFSGAM (known outside of Australia as First State Investments) will not be included in the previously announced demerger of CBA’s wealth management and mortgage broking businesses.
CBA chief executive Matt Comyn said: “CFSGAM is a high-quality business that has achieved strong growth under CBA’s ownership for over 18 years. MUTB is one of the largest asset managers in Japan, with a long history and deep capabilities. We believe that CFSGAM’s clients and employees will benefit from MUTB’s supportive long-term ownership.
“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. The sale of CFSGAM to MUTB represents significant value for CBA shareholders and is a positive outcome for CFSGAM clients and employees.”
Investment opportunities
The firm said that it estimates post-tax gain on the sale of approximately A$1.5bn, which includes estimated post-tax separation and transaction costs of approximately A$100m.
The deal is subject to a number of regulatory approvals in various jurisdictions, including Australia, Japan, Hong Kong, Singapore, the UK and the US. The transaction is expected to complete in mid-2019.
MUTB president and CEO Mikio Ikegaya said: “We expect CFSGAM will continue to deliver leading investment solutions to its existing global client base.
“We also believe CFSGAM’s highly seasoned investment teams and competitive product line-ups will enable us to deliver new investment opportunities to our clients. We look forward to welcoming the full CFSGAM team to our group.”
The firm has been one of the big banks caught up in the wealth management compliance scandal within the Australian Royal Commission.
Wealth management hires
Meanwhile, CBA has appointed Jason Yetton as chief executive and Andrew Morgan as chief financial officer of its demerged wealth management and mortgage broking businesses (which it has termed ‘NewCo’), effective 1 December 2018.
These appointments follow CBA’s commitment in June this year to the demerger of NewCo, which includes Count Financial, Financial Wisdom, Aussie Home Loans and CBA’s minority shareholdings in ASX-listed companies CountPlus and Mortgage Choice.
Yetton will join after two years as chief executive and managing director of SocietyOne. Prior to that, he spent more than 20 years at Westpac and BT Financial Group. Yetton’s appointment is subject to regulatory approvals, including any applicable Australian Prudential Regulation Authority registration requirements.
Morgan is currently chief financial officer of wealth management at CBA. Prior to this, he was CFO for the business and private bank and Bankwest at CBA. He has more than 25 years’ experience in financial services.
