Yesterday, CBA announced it was suspending the demerger of its wealth management and mortgage broking businesses slated to occur this calendar year, in order to better address the recommendations from the royal commission; via Australian Broker.
Following the news, Daniel John, head of group public affairs and communications at Commonwealth Bank (CBA), provided further clarification to Australian Broker on the “pragmatic and realistic” decision to halt the split.
He explained, “The reason we didn’t give a timescale is there’s a degree of uncertainty out there, especially coming off the royal commission.
“It’s very much on hold. Whether it would happen in 2020 or 2021 is very difficult to predict. We don’t want to get to the point where we’re making another announcement in six months’ time saying we’ve put it off again.”
John reaffirmed the bank’s commitment to the demerger but acknowledged that “it could be revised.”
To illustrate his point, he cited the sale of Colonial First State Global Asset Management (CFSGAM) to Mitsubishi UFJ Trust and Banking Corporation last year. The total cash consideration of the transaction was $4.13bn, and CFSGAM was pulled from the entities included in the scheduled demerger.
John said that the bank would be “duty bound by our shareholders and customers” to give real consideration to such “a definitive and attractive” offer.
However, a statement from Aussie Home Loans said the suspension of preparations around the demerger is “indefinite”.
The CBA-owned brokerage currently operates 225 franchise stores and counts more than 1,000 brokers in its network.
According to CEO James Symond, CBA’s announcement “doesn’t impact [Aussie’s] focus on [its] customers, brokers and team members”.
“We remain fiercely independent in our operations and approach to providing outstanding customer outcomes and it is worth noting that 66% of the loans provided by Aussie in 2018 were with lenders outside of the big four banks.
“We will continue working on our strategy towards building a safer and stronger Aussie,” he added.
Several months ago, CBA announced that Jason Yetton and Andrew Morgan were to head the new wealth management and mortgage broking entity NewCo, as CEO and CFO respectively.
“At the moment, nothing has changed in regards to Jason’s or Andrew’s position because we’ve still got to manage those businesses. For the time being, they’ve still got roles to play in making sure that we run those businesses for the benefit of the consumers, customers, and shareholders,” said Daniel John.
