Commonwealth Bank of Australia (CBA) announced on Thursday that it is delaying its demerger plans for its wealth management and mortgage broking businesses.
This decision stems from the intent to prioritise the implementation of the banking royal commission’s recommendations, refunding of customers, and remediation of past issues.
CBA said, however, that it remains committed to its strategy to become a simpler, better bank, which includes the exit of its wealth management and mortgage broking businesses.
The bank disclosed the demerger in June 2018, noting that it needed to streamline its business model and focus on more traditional banking services by combining its Colonial First State brands and mortgage broking business, Aussie Home Loan, in a company called “CFS Group.”
However, in October, CBA announced that it would sell Colonial First State Global Asset Management to Japan's Mitsubishi UFJ Trust and Banking Corporation for $4.13 billion while pushing through with the demerger of the remaining assets.
Experts speculated that CBA's initial plan to float the business this year, dubbed as "NewCo," could have faced challenges.
“NewCo is also much smaller than what had been initially flagged in April last year, after an October deal to sell Colonial First State Global Asset Management to a Japanese banking giant for $4.1 billion,” said The Sydney Morning Herald.
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