Borrow
CBA takes $1.5bn COVID-19 hit, sells CFS
The Commonwealth Bank has announced that it is selling off the majority of its wealth management subsidiary Colonial First State (CFS), while offering an additional $1.5 billion to support its customers.
CBA takes $1.5bn COVID-19 hit, sells CFS
The Commonwealth Bank has announced that it is selling off the majority of its wealth management subsidiary Colonial First State (CFS), while offering an additional $1.5 billion to support its customers.
The banking giant told investors that it would sell off 55 per cent of its wealth management business to global investment firm KKR. CFS is currently valued at $3.3 billion.
The transaction implied a total valuation for CFS on a 100 per cent basis of $3.3 billion, which will result in CBA receiving cash proceeds of approximately $1.7 billion, making for a post-tax gain of $1.5 billion. The post-tax gain figure included separation and transaction costs for the bank of around $180 million.
CBA reported the sale price represents a multiple of 15.5 times CFS’ pro forma net profit after tax of around $200 million.
CBA and KKR intend to undertake a significant investment program in CFS, aiming to strengthen its position in the Australian market as a retail super and investments business.
The bank said the sale is “expected to enhance the tools provided and the ease of doing business with CFS for advisers”.
The Commonwealth Bank also informed investors it has taken out an additional $1.5 billion in loan provisions as it prepares for the impact of COVID-19 on its bottom line.
The bank announced that its cash profits have fallen by 23 per cent to $1.3 billion, citing deteriorating economic conditions during the quarter.
In a statement to the ASX, CEO Matt Comyn told investors that while COVID-19 has created a challenging environment, the bank is in a good position to absorb the losses.
“Today’s announcement of an additional credit provision of $1.5 billion for the potential longer-term impacts of COVID-19 further reinforces our already strong provisioning and balance sheet settings,” Mr Comyn said.
“The strength and resilience of the bank remained evident through the March quarter. Our people have continued to serve our customers diligently and professionally under challenging circumstances.
“Given the challenges our people have faced, it was particularly pleasing to note a significant improvement in our recent survey of employee engagement (up 13 per cent on a year ago) which reflects the commitment and sense of pride our people have in supporting their customers and the broader community during these difficult times.”
The Commonwealth Bank was the last of the big four banks to make an announcement, which did not include whether or not they will pay a dividend to shareholders.
The National Australia Bank has announced that it will still pay a dividend after a capital raise, while ANZ and Westpac have deferred dividend payments during the pandemic.
About the author
About the author
Banking
ANZ cops $10m penalty for wrongful fees
The Federal Court of Australia has found that banking giant ANZ engaged in unconscionable conduct and breached its obligations as a financial services licensee. ...Read more
Banking
How $800m could make banking better
The federal government’s digital business plan to drive Australia’s economic recovery “will make banking faster and easier”, according to an industry group. ...Read more
Banking
How sneaky fees could be costing you hundreds
As many as a quarter of Australians are being stung with unknown, unfair or incorrect banking fees, with the costs adding up during the COVID-19 pandemic, an expert has revealed. ...Read more
Banking
Westpac hit with biggest fine in corporate history
Australian banking and financial services giant Westpac has reached an agreement with AUSTRAC to pay $1.3 billion for breaching anti-money laundering and counter-terrorism financing laws. ...Read more
Banking
6 ways to know you need a new bank
Unhappy with your current bank? Here’s how to know if you need to make a change. ...Read more
Banking
The banks beating the big 4 when it comes to customer satisfaction
Midsize banks are the biggest winners in a new survey of bank customer satisfaction. ...Read more
Banking
‘There’s no shame in deferring payments’
Deferring mortgage repayments is “a lesser evil” than having to sell property in the current market if you can hold off, a mortgage broker has advised. ...Read more
Banking
Standing on the shoulder of giants: How Australia’s fintechs can tap into open source
Australia has developed a vibrant fintech scene, which, in one year alone, grew by a staggering 37 per cent. The surge has ushered in a new era of financial products and services, from fully online ho...Read more
Banking
ANZ cops $10m penalty for wrongful fees
The Federal Court of Australia has found that banking giant ANZ engaged in unconscionable conduct and breached its obligations as a financial services licensee. ...Read more
Banking
How $800m could make banking better
The federal government’s digital business plan to drive Australia’s economic recovery “will make banking faster and easier”, according to an industry group. ...Read more
Banking
How sneaky fees could be costing you hundreds
As many as a quarter of Australians are being stung with unknown, unfair or incorrect banking fees, with the costs adding up during the COVID-19 pandemic, an expert has revealed. ...Read more
Banking
Westpac hit with biggest fine in corporate history
Australian banking and financial services giant Westpac has reached an agreement with AUSTRAC to pay $1.3 billion for breaching anti-money laundering and counter-terrorism financing laws. ...Read more
Banking
6 ways to know you need a new bank
Unhappy with your current bank? Here’s how to know if you need to make a change. ...Read more
Banking
The banks beating the big 4 when it comes to customer satisfaction
Midsize banks are the biggest winners in a new survey of bank customer satisfaction. ...Read more
Banking
‘There’s no shame in deferring payments’
Deferring mortgage repayments is “a lesser evil” than having to sell property in the current market if you can hold off, a mortgage broker has advised. ...Read more
Banking
Standing on the shoulder of giants: How Australia’s fintechs can tap into open source
Australia has developed a vibrant fintech scene, which, in one year alone, grew by a staggering 37 per cent. The surge has ushered in a new era of financial products and services, from fully online ho...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
