In what could be seen a a recognition of the intrinsic conflicts of interest between advice and product manufacturing, CBA has announced that it will demerge its wealth management and mortgage broking businesses. It will also undertake a strategic review of its general insurance business, including a potential sale. No financial details were provided, ahead of the AGM on 8th August.
CBA’s Retail Banking Services (RBS) division will now include Bankwest. In addition, RBS will also include Commonwealth Financial Planning, designed to deliver better customer outcomes through a new safer, simpler, and more scalable model for financial advice. RBS will also have responsibility for General Insurance while the strategic review of that business is underway.
CBA says these initiatives will result in the creation of a leading independent wealth management business and enable CBA to enhance its focus on its core banking businesses in Australia and New Zealand and create a simpler, better bank.
The demerged business, CFS Group, will include CBA’s Colonial First State, Colonial First State Global Asset Management (CFSGAM), Count Financial, Financial Wisdom and Aussie Home Loans businesses.
CFS Group will benefit from a separate listing and ability to pursue its own growth strategies.
CBA says the move will unlock greater value for shareholders through the separation of CBA’s wealth management and banking businesses.
