By Robb M. Stewart
MELBOURNE, Australia--Commonwealth Bank of Australia has agreed to revise the proposed sale of its Australian life-insurance business to AIA Group, and now expects it to fetch 150 million Australian dollars (US$101 million) less than before.
The exit has been the subject of an ongoing regulatory approval process that the big Australian bank said had led to a period of uncertainty for CommInsure Life. The changes agreed to by the companies provides policyholders and staff with more clarity about the future of the business, CBA Chief Executive Matt Comyn said Friday.
The revised deal will comprise a joint cooperation agreement, reinsurance agreements, partnership milestone payments and a statutory asset transfer. In aggregate, Commonwealth Bank said it now expects proceeds of A$2.375 billion, with the arrangements implemented in a staged manner throughout the 2020 fiscal year.
The bank said it would receive about A$750 million by the end of the fiscal first half, and the remaining A$1.625 billion by the end of fiscal 2020.
The revised deal remains subject to a number of Australian regulatory approvals, as well as entering of reinsure arrangements.
By the end of the sale process, Commonwealth Bank forecast about A$1.6 billion-A$1.8 billion in common equity Tier 1 capital would be released, which would lift the bank's CET1 capital ratio by about 0.35-0.40 percentage points.
The bank said it remained committed to completing the sale of its 37.5% equity stake in BoCommLife. In May 2018, it agreed to exit the stake in a deal with Japan's MS&AD Insurance Group worth about A$668 million, subject to approval from China Banking and Insurance Regulatory Commission. The exit was planned to help to satisfy a condition of the proposed sale of the bank's life insurance businesses in Australia and New Zealand to AIA Group.
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